Policy Scan

POLICY SCAN 2018

CONTENTS 03 … Welcome 04 … A look ahead with former Speaker Newt Gingrich and former Governor Howard Dean 06 … Trump Administration Confirmations 07 … Dates of interest 2018 08 … Congressional Calendar 2018 09 … Congressional Retirements 10 … Election 2018 13 … Policy Issues in the 2nd session of the 115th Congress 14 … First session holdover 26 … Governors 27 … A look ahead at issues facing local governments with former Mayors Stephanie Rawlings-Blake of Baltimore and Michael Nutter of Philadelphia 30 … Dentons 50 State Policy Scan

Friends, On behalf of Dentons’ US public policy practice, we’re delighted to present Policy Scan 2018, a comprehensive crystal ball for the new year’s policy and political landscape. Navigating this new year, like the new Washington, can be a fraught proposition, but our hope for this report is a simple but significant one: that it proves a useful resource to you in navigating the United States’ complex and turbid legislative and regulatory climate. The Policy Scan draws on the expertise and insights of a renowned, bipartisan public policy practice that includes a former Speaker of the US House, former members of Congress, state attorneys general, US diplomats, and senior federal and state political and policy advisors. Our counsel is shaped by unparalleled reach and experience in Washington, 50 state legislative chambers, governors’ mansions, and city halls across the country. Our counsel is what distinguishes us: read the report and, we think, you’ll see why. Dentons’ US public policy practice includes federal policy and political professionals, a 50-state network of premiere state political professionals, and the nation’s largest bipartisan attorneys general practice. This report is a reflection of their hard work last year, and readiness to take on the challenges of the next. We invite you to share Policy Scan 2018 with your colleagues and contacts and give us your feedback. Sincerely, Eric Tanenblatt Michael Zolandz Ambassador Gordon Giffin Chair, Public Policy Chair, Federal Regulatory Partner and Compliance Maryscott (Scotty) Greenwood Sander Lurie John Russell, IV Principal Principal Principal Rodney J. Boyd Heather Sibbison Thurbert Baker Partner Partner Partner POLICY SCAN 2018 • 3

A look ahead with former Speaker Newt Gingrich and former Governor Howard Dean HOWARD DEAN NEWT GINGRICH The year’s Congressional activities came to a close with Historians will look on 2017 as the year in which President a massive tax reduction package passed without any Trump began learning how to be an effective President. Democratic input or support. The good news for corporate clients is that most will pay significantly less in taxes to the Despite enormous and unending news media hostility, Federal Government. The bad news for the GOP is that virtually unanimous opposition by Democrats and a 61% of the electorate believes the bill does little for them “resistance” movement among mobilized left wing activists, personally, making the signature GOP achievement of the Trump steadily consolidated his power and capabilities. first year with control of the House, the Senate and the White House a liability for November of 2018. From naming a young conservative to the Supreme Court to the largest number of Appeals Court judges ever It is likely, given the past history of mid-terms, that the confirmed in the first year of a Presidency, Trump has House will be Democratic 13 months from now, and there is begun to put his mark on the judiciary. Collaborating with a reasonable possibility, despite the difficult map, that the Leonard Leo and the Federalist Society, President Trump Senate and a number of State Legislatures and Governor’s has begun to nominate young conservatives who will shape offices will also be controlled by the Democrats, in part the judiciary for the next 40 years. Senate Majority Leader aided by the outrage of young voters over the Trump McConnell has done a brilliant job of forcing through the administration’s attacks on net neutrality, climate change nominations in the Senate. and National Monuments. Voters under 30 voted 69% D in Virginia in November, and they turned out in unusually Trump’s second great achievement has been the most high numbers. That won’t change the tax bill, but it will radical deregulatory process in modern times. Not since end the parade of conservative judges being confirmed Calvin Coolidge in the 1920s has there been such a by party-line votes, and will limit the attempts at changing methodical effort to cut red tape and return power from regulations by executive orders. Washington to the rest of the country. Most economists, including conservatives, believe the deficit Trump’s third great achievement was learning the lesson of will be very negatively affected by the tax bill. Coupled with legislative leadership in the failure to repeal Obamacare and the unwinding of Quantitative Easing on both sides of the using a much more sophisticated approach that got the Atlantic and modestly rising interest rates, I would expect the massive tax cut bill through Congress. economy to do well, but I think the soaring valuations in the stock market will be reined in by more wary investors. 4 • POLICY SCAN 2018

DEAN (CONTINUED) GINGRICH (CONTINUED) The good news for the Pharmaceutical Industry is that Scott Trump’s fourth achievement was increasing mastery of Gottlieb at FDA appears to be reducing approval times for a international relationships, and the release of the National variety of new products. Not so good news for the industry Security Strategy was notable both for how early it was is that even Republicans are vocal about the high cost of completed (well before other administrations) and for how prescription drugs without yet fully internalizing the role that many profound changes in principle and in policy it contains. pharmacy benefit managers, hospitals, insurers and others play in those price levels . Expect more blockbuster mergers Trump faces three challenges going into 2018. like CVS/Aetna. This consolidation is really a result of the ACA, and will likely accelerate in search of both profits and First, will the economy grow rapidly enough that the cost controls. American people identify “Trumpism” with more take home pay and more jobs? This is the key to Republicans Finally, expect the continued dilution of American influence winning in November. in the world. The America First platform has reduced our diplomatic clout and our ability to use soft power abroad Second, will the various scandals involving Trump We are still important players in part because our military associates, Clinton, Russia etc continue to grow or gradually remains the strongest in the world. fade away? Europe does not believe that they can rely on the US so they Third, will North Korea be managed without war? are recalibrating to a less dependent status re: economic and human rights. At the same time, our most important This will strike some as a remarkably positive view of 2017, European ally, the UK, is rapidly taking itself out of the but I would argue that the hatred of the elite media has influential position they have long held in Europe and the rest distorted everything about how Washington elites think of the world. Even our largest trading partner, Canada, has an about Trump. extensive free trade agreement with the EU as an insurance policy against the failure of the NAFTA negotiations. The emphasis among elites is on the noise—tweets that outrage, leaks about investigations, etc. Yet in The one constant we can predict with accuracy about the long run none of that will matter as much as the Trump administration is that it is unpredictable. That substantive achievements. may be helpful in real estate negotiations, but it is not a characteristic which creates confidence in diplomatic or economic ventures. POLICY SCAN 2018 • 5

Trump Administration Confirmations Despite the Senate’s confirmation on December 21 With an even narrower Republican majority in the Senate of over two-dozen remaining Trump Administration during the 2nd Session of the 115th Congress in the wake nominees before adjourning for the year, President of the Alabama special election, and as the White House Trump, as a result of factors both within and outside of and agency heads continue to spar over the selection his Administration’s control, ended his first year in office of would-be nominees, in 2018 President Trump’s total trailing his four immediate predecessors significantly number of confirmations are expected to continue to in total number of confirmations and average time to lag behind those of the last four presidents during their confirmation per nominee. respective second years in office. Of 624 key Trump administrations positions requiring Comparison of Presidential Nominees Requiring Senate approval, 240 have been confirmed Senate Approval D. Trump 14 300 177 72 B. Obama 18 452 188 54 240 249 G.W. Bush 125 493 123 36 B. Clinton 11 471 151 38 131 G.H.W. Bush 12 405 61 48 4 Failed nominations No nominee Confirmed Awaiting nomination Sent but not yet confirmed Awaiting confirmation Average time to confirm (days) Confirmed 6 • POLICY SCAN 2018

Dates of Interest 2018 Event Date Event Date 01/03 CHIP Reauthorization 03/2018 Federal Reserve Releases FOMC Minutes from Raising the Debt Limit 03/2018 December meeting 01/07 DACA Visas Expire 03/05 Transportation Research Board Annual Meeting 01/10 Pennsylvania Special Election - 18th District 03/13 Illinois Primary Elections 03/20 FERC decision on DOE Baseload-Reliability 01/11 Federal Reserve - FOMC Meeting 03/20-21 Proposal FAA Funding and Reauthorization 03/31 President Trump must certify (or not) Iranian 01/12-17 Senate Budget Committee to Report Concurrent 04/01 compliance with JCPOA Resolution on the Budget Deadlines for USG’s extension of temporary 01/19 Federal Reserve - FOMC Meeting 05/1-2 waivers of sanctions against Iran under 01/19 House Appropriations Committee Starts 05/15 terms of JCPOA 01/26 Considering Annual Bills Current CR expires 01/23-28 House Appropriations Committee Target for 06/10 01/30 Reporting Last Annual Spending Bill FISA Section 702 Reauthorization expires 01/30-31 House Target for Completing Action on Annual 06/30 01/31 Spending Bills Solar ITC Case Federal Reserve - FOMC Meeting 06/12-13 02/05 Mexican Presidential Election 07/01 NAFTA Renegotiations Round 6 2/12-15 Federal Reserve - FOMC Meeting 07/31-08/01 02/15 Michigan Special Election - 13th District 08/07 State of the Union Address 02/22-25 U.N. General Assembly Meeting 09/18 02/23-25 Federal Reserve - FOMC Meeting 09/25-26 Federal Reserve - FOMC Meeting 02/23-26 FY 2019 begins 10/01 02/26 Federal Reserve - FOMC Meeting 11/07-08 EPA Administrator Scott Pruitt testifies before 2018 Midterm Elections 11/06 Senate EPW Committee 02/27 Federal Reserve - FOMC Meeting 12/18-19 President Trump Submits FY 2019 Budget Request 02/26-28 NCAI Executive Council Winter Session February CBO Submits report to Budget Committees Republican Governors Association Meeting Democratic Governors Association Meeting National Governors Association Winter Meeting EPA CPP Replacement Rule Public Comment Period closes Arizona Special Election - 8th District National Association of Attorneys General Winter Meeting NEED THESE DATES IN OUTLOOK? Download the entire 2018 US Policy Scan congressional calendar and key dates directly into your Microsoft Outlook calendar. Visit www.dentons.com/en/policyscancalendar POLICY SCAN 2018 • 7

Congressional Calendar 2018 Senate scheduled to be in session House scheduled to be in session House and Senate scheduled to be in session January February March Su M Tu W Th F Sa Su M Tu W Th F Sa Su M Tu W Th F Sa 01 02 03 04 05 06 01 02 03 01 02 03 07 08 09 10 11 12 13 04 05 06 07 08 09 10 04 05 06 07 08 09 10 14 15 16 17 18 19 20 11 12 13 14 15 16 17 11 12 13 14 15 16 17 21 22 23 24 25 26 27 18 19 20 21 22 23 24 18 19 20 21 22 23 24 28 29 30 31 25 26 27 28 25 26 27 28 29 30 31 April May June Su M Tu W Th F Sa Su M Tu W Th F Sa Su M Tu W Th F Sa 01 02 03 04 05 06 07 01 02 03 04 05 01 02 08 09 10 11 12 13 14 15 16 17 18 19 20 21 06 07 08 09 10 11 12 03 04 05 06 07 08 09 22 23 24 25 26 27 28 13 14 15 16 17 18 19 10 11 12 13 14 15 16 29 30 20 21 22 23 24 25 26 17 18 19 20 21 22 23 27 28 29 30 31 24 25 26 27 28 29 30 July August Su M September Sa 01 Su M Tu W Th F Sa Su M Tu W Th F Sa 02 03 Tu W Th F 08 01 02 03 04 05 06 07 01 02 03 04 09 10 15 08 09 10 11 12 13 14 16 17 04 05 06 07 22 05 06 07 08 09 10 11 23/30 24 11 12 13 14 29 15 16 17 18 19 20 21 18 19 20 21 22 23 24 25 26 27 28 12 13 14 15 16 17 18 25 26 27 28 29 30 31 19 20 21 22 23 24 25 26 27 28 29 30 31 October November December Sa 01 Su M Tu W Th F Sa Su M Tu W Th F Sa Su M Tu W Th F 08 01 02 03 04 05 06 01 02 03 15 02 03 04 05 06 07 22 07 08 09 10 11 12 13 04 05 06 07 08 09 10 09 10 11 12 13 14 29 14 15 16 17 18 19 20 11 12 13 14 15 16 17 16 17 18 19 20 21 21 22 23 24 25 26 27 18 19 20 21 22 23 24 23/30 24/31 25 26 27 28 28 29 30 31 25 26 27 28 29 30 8 • POLICY SCAN 2018

Congressional Retirements Texas loses 8 Members that have served 73 terms Arizona, Ohio, New Mexico, Kansas, and Indiana each (about 146 years) including the Chair of the House lose 2 Members. Financial Services Committee. • Arizona loses Members that have served 15 Pennsylvania loses 4 and Michigan and Tennessee each terms (30 years) and one of its Senators lose 3 Members. • Ohio loses Members that have served 13 • Michigan loses Members that have served 46 terms terms (26 years) (over 92 years) including the Ranking Member of the • New Mexico loses Members that have served 10 terms Judiciary Committee • Tennessee loses Members that have served 28 terms (20 years) (56 years) including the Chairs of the House Budget • Kansas loses Members that have served 9 Committee and Senate Foreign Relations Committee • Pennsylvania loses Members that have served 28 terms terms (18 years) (56 years) • Indiana loses Members that have served 7 terms (14 years) 20 States currently lose a single Member Including Virginia, which loses the Chair of the House Judiciary Committee who has served 13 terms (26 years) HOUSE GOP RUNNING FOR HOUSE GOP SENATE GOP HIGHER OFFICE RETIRING OUTRIGHT RETIRING OUTRIGHT District Member 2016% District Member 2016% State Member 2016% TN-6 Black Trump +48.9 VA-6 Goodlatte Trump +24.8 TN Corker Trump + 26.15 IN-6 Messer Trump +40.3 TX-5 Hensarling Trump +28.4 AZ Flake Trump + 3.57% IN-4 Rokita Trump +34.1 TX-6 Barton Trump +12.3 UT Hatch Trump + 19 NM-2 Pearce Trump +10 TX-21 Smith Trump +10 HOUSE DEMS RETIRING OUTRIGHT ID-1 Labrador Trump +38.3 FL-27 Ros-Lehtinen Clinton +19.6 OH-16 Renacci Trump +16.6 PA-15 Dent Trump +7.6 District Member 2016% Clinton +68.9 PA-11 Barletts Trump +23.8 WA-8 Reichert Clinton +3 IL-4 Gutierrez Clinton +60.7 Clinton +7.8 SD-AL Noem Trump +29.7 OH-12 Tiberi Trump +11.3 MI-3 Conyers Trump +1.6 Clinton +22.8 WV-3 Jenkins Trump +49.2 NJ-2 LoBiondo Trump +4.6 MI-9 Levin Clinton +45.7 Clinton +4.9 HOUSE DEMS RUNNING KS-2 Jenkins Trump +18.4 NH-1 Shea-Porter FOR HIGHER OFFICE TX-3 Johnson Trump +14.2 MA-3 Tsongas District Member 2016% TN-2 Duncan Trump +35.4 TX-29 Green AZ-9 Sinema Clinton +16.3 TX-2 Poe Trump +9.3 NV-4 Kihuen CO-2 Polis Clinton +21.3 MI-11 Trott Trump +4.4 MN-1 Walz Trump +14.9 PA-18 Murphy Trump +19.6 SPECIAL ELECTIONS TX-16 O'Rourke Clinton +40.7 AZ-8 Franks Trump + 21.1 Arizona 8th District special election primary; 02/27 MD-6 Delaney Clinton +15.1 TX-27 Farenthold Trump + 23.6 Texas primary elections; 3/06 NV-3 Rosen Trump +1.0 PA-9 Shuster Trump + 19 Pennsylvania 18th District special election; 03/13 HI-1 Hanabusa Clinton +32.6 SENATE DEMS Illinois primary elections; 3/20 RETIRING OUTRIGHT NM-1 Grisham Clinton +16.5 Michigan 13th District primary election; 8/07 State Member 2016% MN Franken Clinton + 1.5% POLICY SCAN 2018 • 9

Election 2018 History does not favor the GOP majorities in the House have all been “wave” elections in which there was a backlash or Senate. And neither does the generic ballot. Or the against the president’s party. The generic ballot shows a current voter intensity. History tells us that the party with large Democratic lead. And we know the party out of power the White House loses seats in the midterms. Since 1946, hungrily lusts for it back. Can the GOP defy the odds? the mean result for a president’s party in midterms is a loss The bright spots are that the Senate map favors the GOP of 25 House seats. The median result is a loss of 22 seats. and Democratic hopes for retaking the chamber in 2018 Democrats need to pick up 24 to take the majority. In 16 of seems like a major stretch. The House map, with the help of 18 elections, the president’s party has lost seats. The most redistricting and geography, is also tilted, ever so slightly in recent three midterm elections — 2006, 2010, and 2014 — Republicans’ favor. But is it waterproof? SENATE TOSS UP 4D - 3R For Democrats, 10 of their seats at risk are in states Trump won, and five of those are in State Democratic District Republican states Trump won by 18 points or more. In AZ Flake (open) comparison, only one Republican senator IN Joe Donnelly NV Dean Heller in a state Clinton won, Dean Heller in Nevada, TN Corker (open) is on the ballot MO Claire McCaskill WV Joe Machin MN Tina Smith HOUSE TOSS UP 4D - 17R District Democratic District Republican District Republican District Republican AZ-2 Martha McSally IA-1 Rodney Blum NJ-11 Rodeny Frelinghuysen MN-1 Walz (open) CA-25 Steve Knight Il-6 Peter Roskam NY-19 John Faso CA-48 Dana Rohrabacher MI-11 David Trott TX-7 John Culberson MN-8 Richard Nolan CA-49 Darrell Issa MN-2 Jason Lewis VA-10 Barbara Comstock CO-6 Mike Coffman NE-2 Don Bacon WA-8 Reichert (open) NH-1 Shea Porter FL-26 Carlos Curbelo NJ-2 LoBiondo (open) NV-3 Jacklyn Rosen SENATE LEANER 4D - 0R District Republican Hillary Clinton won the national popular State Democratic NONE vote by 2.1 percentage points. However, she lost the median House district by 3.4 FL Bill Nelson percentage points. ME Angus King (I) ND Heidi Heitkamp OH Sherrod Brown HOUSE LEANER 6D - 22R District Democratic District Republican District Republican District Republican FL-27 Ros-Lehtinen (open) KS-2 Jenkins (open) NY-22 Claudia Tenney AZ-1 Tom O'Halleran CA-10 Jeff Denham KS-3 Kevin Yoder PA-6 Ryan Costello CA-39 Ed Royce KY-6 Andy Barr PA-7 Patrick Meehan CA-7 Ami Bera CA-45 Mimi Walters ME-2 Bruce Poliquin PA-8 Brian Fitzpatrick GA-6 Karen Handel MI-8 Michael Bishop PA-15 Dent (open) FL-7 Stephanie Murphy IA-3 David Young MN-3 Eric Paulsen TX-23 Will Hurd IL-12 Mike Bost NJ-7 Leonard Lance TX-32 Pete Sessions NJ-5 Josh Gottheimer UT-2 Mia Love NV-4 Ruben Kihuen 10 • POLICY SCAN 2018

Election 2018 (continued) SENATE LIKELY 5D - 0R District Republican State Democratic NONE MT John Tester NJ Robert Menendez PA Robert Casey WI Tammy Baldwin MI Debbie Stabenow HOUSE LIKELY 10D - 16R District Democratic District Democratic There are 23 House Republicans representing districts NH-2 Ann Kuster Clinton won, which provide solid pickup opportunities. AZ-9 Sinema (open) NY-3 Thomas Souzzi However, there are also 12 Democrats representing OR-5 Kurt Schrader districts Trump won who will have to play defense CA-24 Calud Carbajal PA-17 Matthew Cartwright WI-3 Ron Kind FL-13 Charlies Crist IA-2 Dave Loebsack MN-7 Colin Peterson District Republican District Republican District Republican MT-AL Greg Gianforte NY-11 Daniel Donovon CA-21 David Valadao NC-2 George Holding NY-24 John Katko NC-3 Robert Pettenger OH-1 Steve Chabot CA-50 Duncan Hunter NC-13 Ted Budd OH-15 Steve Stivers NJ-3 Tom MacArthur OH-16 Renacci (open) FL-18 Brian Mast NM-2 Pearce (open) PA-16 Lloyd Smucker NY-1 Lee Zeldin VA-2 Scott Taylor GA-7 Rob Woodall VA-5 Thomas Garrett WI-6 Glenn Grothman IL-13 Rodney Davis IL-14 Randy Hultgren MI-7 Tim Walberg SENATE SOLID 18D - 5R State Democratic State Democratic State Democratic State Republican MA Elizabeth Warren VA Tim Kaine TX Ted Cruz CA Dianne Feinstein NM Martin Heinrich WA Maria Cantwell MS Roger Wicker NY Kristen Gillibrand MN Amy Klobuchar NE Deb Fischer CT Chris Murphy RI Sheldon Whitehouse UT Orrin Hatch VT Berine Sanders (I) WY John Barrasso DE Tom Carper HI Mazie Hirono MD Benjamin Cardin POLICY SCAN 2018 • 11

GENERIC BALLOT ONE YEAR OUT HISTORICAL RECORD OF MIDTERM ELECTIONS AND ELECTION RESULT Year Average Seat gain Year President Party House Senate Seats Seats Gop + 54 House / Dec '93 Republican + 2.5 Gop +9 Senate 1966 Lyndon B. Johnson Democratic D - 47 D-3 Dem + 2 House / 1970 Richard Nixon Republican R - 12 R+1 Gop + 2 Senate Dec '95 Democrats + 1.5 Dem +4 House / Senate even 1974 Gerald Ford Republican R - 48 R-4 Dec '97 Democrats + 3 Dem + 1 House / 1978 Jimmy Carter Democratic D - 15 D-3 Dem + 4 Senate 1982 Ronald Reagan Republican R - 26 0 Gop + 8 House / Dec '99 Democrats + 4 Gop + 2 Senate 1986 Ronald Reagan Republican R-5 R-8 Dec '01 Republican + 4.6 Gop + 3 House / 1990 George H. W. Bush Republican R-8 R-1 Gop + 4 Senate 1994 Bill Clinton Democratic D - 54 D-8 Dem + 31 House / Dec '03 Republican + 2.6 Dem + 5 Senate 1998 Bill Clinton Democratic D+5 0 Dem +21 House / 2002 George W. Bush Republican R+8 R+2 Dem + 8 Senate Dec '05 Democrats + 7.9 Gop +63 House / Gop + 6 Senate 2006 George W. Bush Republican R - 30 R-6 Dec '07 Democrats + 10 Dem + 8 House / 2010 Barack Obama Democratic D - 63 D-6 Dem + 2 Senate 2014 Barack Obama Democratic D - 13 D-9 Gop + 13 House / Dec '09 Republican + 2 Gop + 9 Senate Dec '11 Republican + 9.4 Dem + 6 House / Dec ' 13 Republican + 2.4 Dem + 2 Senate Dec '15 Republican + 1.1 Dec ' 17 Democrats + 8 ?????? 12 • POLICY SCAN 2018

POLICY ISSUES IN THE 2ND SESSION OF THE 115TH CONGRESS It’s often said that elections have consequences. When it comes to passing major legislation, so do election years and 2018 is not expected to be the exception! Lawmakers engaged in tough re-election campaigns are often reluctant to support controversial pieces of legislation that could damage them with voters in their districts and states. Further complicating this scenario is the fact that Majority Leader Mitch McConnell and House Speaker Paul Ryan have very clear and substantial differences about what issues to pursue in 2018. Speaker Ryan wants to swing for the fences in 2018 by pursuing such issues as welfare entitlements reform — subjects that are poison pills for most Congressional Democrats. Speaker Ryan also wants to pursue deficit reduction legislation and a balanced budget amendment, issues that are clearly non-starters with most Democrats in the Senate. In contrast, given his need for 60 votes to pass legislation, Leader McConnell envisions 2018 as a year of more limited initiatives such as a potential DACA fix, a regulatory relief bill important to community banks and credit unions reforming the Dodd-Frank Act, and perhaps even an infrastructure bill. Leader McConnell has explicitly rejected making welfare reform and entitlement curbs a part of the 2018 agenda given what he sees as the impossibility of pursuing these proposals on a bipartisan basis. While both parties will speak of the need for bipartisanship and frequently bemoan its absence, Congressional Democrats are unlikely to provide President Trump and Congressional Republicans with much support for major legislative initiatives unless these proposals strongly reflect Democratic priorities. Simply put, it is not too cynical to say, when considering potential legislation in 2018, going into the election, Senators and Members of both parties will often be asking the question: would they rather pass the bill or have the issue that stems from the failure to pass such legislation? Recently, President Trump outlined his 2018 legislative goals as including a health care fix to replace what he sees as the failures of Obamacare, an infrastructure plan that he hopes will be bipartisan (although providing only $200 billion in direct government funding over 10 years is not likely to attract Democratic support) and various legislative proposals to reform the welfare system through more work requirements and to reduce the social safety net. Most, if not all of these proposals involve substantive changes that cannot be achieved through the reconciliation process that was used in December to pass the tax cut bill. Thus, to move these bills forward, 60 Senate votes, not 50 will be required. Even where the reconciliation process can be employed in 2018, getting 50 Republican votes for these proposals in an election year will be difficult, and thus, some support from Senate Democrats is likely to be required. While it is difficult to pass legislation in an election year, Republicans will face pressure to deliver on campaign pledges ahead of the November mid-terms. Moreover, recent Presidents have achieved significant legislative victories in their second year in office. In 2002, President Bush secured trade promotion authority and received Congressional approval for the use of military force in Iraq. In 2010, Congress passed the Affordable Care Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act, two of President Obama’s largest legislative achievements. POLICY SCAN 2018 • 13

First session holdovers Government Funding requirements triggered by the tax cut bill in order to avoid immediate cuts to mandatory spending programs • Congress passed, and the President signed, another stopgap continuing resolution (CR) extending federal Federal Debt Limit government funding through January 19, 2018 • In November 2017, the Congressional Budget Office • Enactment of another CR is likely to be required by (CBO) estimated that unless the debt limit is increased or January 19th to give Congressional negotiators enough suspended, by using all available extraordinary measures time to negotiate an omnibus spending bill, funding such as temporarily borrowing from such accounts the government through the end of the FY 18 fiscal year as the Thrift Savings Plan’s G fund, the Treasury will (9/30/18) probably have enough cash to make its usual payments until late March or early April 2018. Sequester spending caps Disaster aid • Must be raised in January 2018 by Congress if Members and Senators want to pass the spending hike approved • The Senate is expected to take up disaster aid early in by Senate and House DOD Appropriations bills and avoid January after leaving Washington without acting on automatic cuts to programs such as Medicare (including an $81 billion disaster aid bill that the House passed in $26 billion in 2018 alone) and domestic spending. December. The bill had a funding level that Senators Exceeding the spending caps will take 60 votes in the from Texas, Florida and California, among others, and Senate thus giving Senate Democrats considerable those interested in aid to Puerto Rico consider to be leverage in spending negotiations. grossly inadequate. • Congressional Democrats are unlikely to support Health Insurance Market Stabilization Legislation any bill that raises defense spending caps without a corresponding increase in the caps • Senator Susan Collins (R-ME) made a deal with on non-defense spending. Republican Congressional leadership to have the Senate take up and pass in December 2017 two health insurance Deferred Action for Childhood Arrivals (DACA) deal Obamacare market stabilization bills — one providing two years of cost-sharing reduction payments and a • President Trump deferred implementation of his order second funding “reinsurance” programs — in exchange ending the program until March 5, 2018 in order to give for her support in December of the tax cut bill and the Congress time to pass DACA fix legislation protecting the current CR. When many House Freedom Caucus these children from deportation if it elected to do so. balked at consideration of these bills in connection with either the CR or the tax cut bill, Senator Collins • Majority Leader Mitch McConnell (R-KY) has promised agreed to defer consideration of these measures until to take up a DACA fix bill in January 2018 if a bipartisan January. Notwithstanding the resistance of many House deal can be reached, but it’s not clear that such a deal conservatives to these bills, Majority Leader McConnell is can come together, especially since House Speaker still expected to have the Senate take up these measures Paul Ryan (R-WI) is said to have promised House early in 2018. conservatives not to take up any DACA fix bill that does not have the support of a majority of House Republicans. Longer-Term Reauthorizations for Surveillance reform, CHIP and Flood Insurance Senate “PAYGO” waiver • Concurrently with the passage of the most recent CR • The current CR that became law in December included in December 2017, Congress waived certain “PAYGO” short-term extensions of a Foreign Intelligence 14 • POLICY SCAN 2018

Surveillance Act (FISA) electronic surveillance program • They were not included in the Republican tax cut bill and the current flood insurance authorization through that became law in December. Congress could end January 19, 2018. It also provided temporary funding for up spending time early in the first quarter of 2018 the Children’s Health Insurance Program (CHIP) through considering whether to pass this extenders package. March 31, 2018 although many believe this funding could well be exhausted in February. DSH Cuts • In the negotiations to pass either further CRs or • The ACA’s disportionate share hospital (DSH) payment ultimately an “omnibus” funding the federal government allotment reductions for Medicaid technically went for the rest of FY 18, a number of Senators and Members into effect on October 1, 2017, and the hospital industry are likely to make a long-term reauthorization of each is lobbying hard for the cuts to be postponed. If of these programs the price for their support of either CHIP is reauthorized, it is expected that the DSH cuts further CRs or an omnibus spending bill. will be postponed as part of that package. States can use Medicaid DSH to reimburse hospitals for Tax Extenders legislation the unreimbursed cost of providing hospital care to Medicaid and uninsured patients. • In late December 2017, Senate Finance Committee Chairman Orrin Hatch (R–UT) released what’s known as a “tax extenders” bill that would continue a long list of tax breaks, many of which expired at the end of 2016. 2017 OUTCOMES Tax Reform 1 Multilateral trade agreement pulled out of National Defense Authorization Act 1 Trilateral trade agreement being Confirmation of 19 Article III judges, renegotiated 12 Court of Appeals and 6 District Judges 1 Impeachment Resolution and Associate Justice Gorsuch in the House (tabled) 52 Executive Orders 2 Temporary Protected Status programs ended 191 Law Suits filed in response 1 Supreme Court to Executive Orders Decision affirming an Executive Order 1 “Dreamers” program ended 0 Miles of Southern Border Wall built POLICY SCAN 2018 • 15

TAX TRADE With the Tax Cuts and Jobs Act signed into law by President Enforcement actions are a high priority of the Trump Trump on December 22nd, many affected businesses and Administration, and enjoy political support in Congress. organizations will shift their focus from Congress to the Outside of high profile (but routine) antidumping and Treasury Department. countervailing duty investigations on newsprint, large civil aircraft and aluminum sheet, the enforcement agenda Here is the Dentons report on the new law. has been driven by novel cases including Section 232 national security investigations on aluminum and steel The speed with which the Tax Cuts and Jobs Act was drafted imports and safeguard investigations on solar products and its enactment so late in 2017 mean that the Treasury and washing machines. Consistent with the recently Department—especially the IRS—will be spending much of released National Security Strategy, which stated that the 2018 developing rules, forms, and guidance to interpret and US “will no longer turn a blind eye to violations, cheating, or implement the new rules. economic aggression,” the Trump administration may take further action against Chinese trading practices, as well as The changes made by the Tax Cuts and Jobs Act are wide- other countries viewed as threats to US economic and/or ranging and, in many cases, almost immediately effective. So, national security. taxpayers have the standard questions that follow enactment of any tax bill: how the IRS intends to interpret particular NAFTA 2.0 provisions, how taxpayers make elections or obtain other relief, etc.? Only this time the questions are voluminous and NAFTA is still being renegotiated, with Round VI scheduled the need for answers urgent. Further, the Tax Cuts and Jobs for the end of January in Montreal. The prospects of Act includes provisions with which neither taxpayers nor the modernizing this 24-year old agreement have mobilized IRS has any experience, particularly the new deduction for various sectors in the economy that are seeking pass-through entities and the new rules for taxpayers that amendments to existing elements of NAFTA and entirely engage in cross-border activities. new chapters to reflect digital commerce, new practices in agriculture and regulatory cohesion, to name just three. The These provisions will force taxpayers to revisit their structure, Trump administration has stated that the three countries arrangements, and activities, often in fundamental ways, need to reach an agreement on an updated NAFTA by next putting intense pressure on the Treasury Department to issue March, well ahead of the July 2018 Mexican Presidential quick and comprehensive guidance to taxpayers in those election, the November 2018 US midterm elections, and areas in particular. next year’s Canadian provincial elections. Many Governors, business and agriculture groups in the US are hoping BUDGET that the Trump Administration doesn’t follow through on its threat to tear up NAFTA, and instead remains at the Unless an omnibus spending deal becomes law in short negotiating table long enough to update the agreement, order which seems highly unlikely, the Trump Administration or at least preserve the status quo. will release it FY19 budget proposal in early February 2018 without even knowing how much money Congress will be Multilateral Trade agreements with the US are unlikely to move spending in 2018. forward, as withdrawal from the Trans-Pacific Partnership shows, but the Trump administration could make progress on Depending on when and whether an omnibus spending a number of bilateral trade agreements with Japan and the deal is reached, the Congressional Budget Committees United Kingdom, albeit moving at a snail’s pace. could also be required to prepare and adopt an FY19 budget resolution covering the period through at least September The US trade policy conversation has been dominated 30, 2019 without even knowing how much money Congress by the NAFTA renegotiations, the Trump administration’s will be spending in 2018. resurrection of Section 232 national security investigations on aluminum and steel, Section 201 safeguard investigations on solar panels and washing machines and high-profile dumping and subsidy cases involving softwood lumber, 16 • POLICY SCAN 2018

aircraft and newsprint. While these contentious issues with three times more applications filed in 2016 than the garner much of the attention, Congress will also have annual limit of 85,000. But the program has also been renewal of the Generalized System of Preferences (GSP) and highly contentious. a Miscellaneous Tariff Bill (MTB) on its radar in 2018. The proposed bill would eliminate the visa lottery system IMMIGRATION and task the US Citizenship and Immigration Services with creating a “preference system” so that foreign students An ad hoc House GOP working group has finished developing educated in the US get priority on visas. It would give a “leg a list of immigration reforms Republicans would want up” to advanced degree holders, those being paid a high addressed in exchange for allowing people brought illegally wage, and those with valuable skills. into the US as children to remain here. House Speaker Paul Ryan charged the group in September 2017 with finding a Other elements of the bill, called the H-1B and L-1 Visa way to solve the latter problem that the broader GOP could Reform Act, include giving the Department of Labor support. Its members presented their plan the Tuesday before “enhanced authority” to review, investigate and audit Christmas to President Donald Trump. employers sponsoring H-1B visas and L-1 visas (for foreigners who’ve worked in an overseas branch of the company and The proposal has three components: request transfer to the US). It would also establish wage floors for L-1 workers. • Reform of legal immigration policies: End chain In the House, Representative Darrell Issa, a California migration, in which immigrants are allowed to bring Republican, introduced a bill that aims to make it more additional family members into the country, and the expensive and complicated for companies to use H-1B visas. diversity visa program, an immigrant visa awarded by Rep. Zoe Lofgren, a Democrat who represents Silicon Valley, lottery. Create an agricultural guest worker program, has a more comprehensive bill that would award visas based a measure long sought by the agricultural industry. on which employers offer the highest salaries. Improve the visa security program, including additional ICE agents at high-risk embassies overseas to ensure NNuummbbeerrooffddeeppoorrttaattiioons by fisccaallyyeeaarr thorough vetting of people coming to the US 500K • Border security: Funding for Trump’s border wall. Make other improvements to border security, and further 400 secure US ports of entry. Increase border security personnel and the use of the National Guard. 211,068 300 • Interior enforcement: Require all employers to use the 200 federal E-Verify system when hiring workers. (E-Verify lets employers compare workers’ employment eligibility forms 100 with Social Security and other records to make sure the information matches. Crack down on “sanctuary” cities that 0 refuse to work with federal immigration law enforcement. ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16 ‘17 Reduce asylum fraud, in which applicants lie about being Note: FY 2017 numbers through Sept. 9 persecuted in their homeland. Criminalize overstaying one’s Source: ICE The Washington Post visa, and no longer take in unaccompanied minors who CLIMATE cross the border. Visa Reform The Trump administration will continue its efforts to unwind Obama-era climate change regulations and begin a formal Senators Chuck Grassley (R-IA) and Dick Durbin (D-IL), process of reviewing, critiquing and possibly seeking to both long-time H-1B reform advocates, reintroduced their debunk the underlying science of man-made climate change. bill for revamping the program early in 2017. The bill was In late December, EPA released an Advanced Notice of first introduced in 2007. H-1B visas are in high demand, Proposed Rulemaking seeking comments on a potential POLICY SCAN 2018 • 17

replacement rule to the Clean Power Plan, the centerpiece also expected to forge ahead with lease sales that would of the Obama administration’s climate change efforts that open up additional offshore and onshore areas for oil and established standards for CO2 emissions on existing power gas development. plants. In 2018, EPA may move forward on proposing a much narrower rule that focuses merely on reducing CO2 emissions Comprehensive Energy Legislation by increasing efficiency at existing power plants. On the legislative side, Congress could consider an On the international stage, while the administration is intent infrastructure package that could include energy provisions, on withdrawing the US from the Paris climate accord under such as reforms of permitting processes for pipelines, the United Nations Framework Convention on Climate transmission lines and hydropower projects. Senate Energy Change (UNFCCC), the trend of “subnational” actors, such and Natural Resources Committee Chairwoman Lisa as cities and states, filling that void continues to grow Murkowski (R-AK) and Ranking Member Maria Cantwell (D- through, e.g., cities’ embrace of smart growth planning WA) re-introduced last year their bipartisan comprehensive principles—environmentally sustainable policies to reduce energy bill, which includes infrastructure, efficiency and carbon emissions across transportation, power and other supply titles, but their House colleagues have yet to express sectors. When the US completes the lengthy withdrawal an interest in moving a large energy package. process in 2020, it will be the only country in the world not signed on to the accord. Former New York City Mayor WATER RESOURCES Michael Bloomberg and California Governor Jerry Brown founded, and are leading ongoing subnational engagement In the coming year, we expect the Trump administration to efforts under, “America’s Pledge”—an initiative that aims to take a hard look at water operations West-wide to determine bring together states, cities, businesses, universities and whether additional water supplies can be developed by citizens to ensure that the US delivers on its pledge under revisiting how environmental standards are applied. We the Paris Agreement. also believe there will be a renewed emphasis on drought resiliency projects to help communities prepare for and ENERGY respond to prolonged periods of abnormally low rainfall, albeit with the administration looking for state, local and private Executive Action partners to assume more of the costs for these infrastructure improvements than traditionally has been the norm. Early 2018 could see executive branch actions that could Legislatively, Senator Jeff Flake (R-AZ) is expected to have significant impacts on the energy sector. First, the introduce, early next year, comprehensive, West-wide Federal Energy Regulatory Commission (FERC) faces a water legislation that is expected to build off of the recently January 10, 2018 deadline to respond to the Department enacted Water Infrastructure Improvements for the Nation of Energy’s (DOE) Notice of Proposed Rulemaking on grid Act (the WIIN Act), which, in large measure, was intended resiliency pricing, which would allow certain coal and nuclear to address water issues in California. We expect Flake’s bill power plants to recover their costs of service. DOE’s NOPR to focus on streamlining the permitting process, address is opposed by a diverse group of stakeholders, including the groundwater depletions, provide new financing tools and renewable energy and natural gas sectors, and it remains to possibly authorize the transfer of federal water resources be seen as to whether FERC can come together on either a infrastructure to state and local governments and in some temporary or long-term measure that would provide support cases, private interests. We anticipate that this effort will for coal and nuclear power plants in organized electricity be coordinated with the administration’s pursuit of a more markets. In addition, President Trump, who has advocated general infrastructure package. taking a more aggressive approach in tackling allegedly abusive trade practices, must make a decision by late January Water Resource Development Act 2018 on whether to impose tariffs on imports of solar cells and modules. Utilities and solar companies have argued that The Water Resource Development Act (WRDA), which the imposition of tariffs and quotas on solar imports would authorizes the US Army Corps of Engineers’ civil works significantly raise the cost of solar installation and production, program, is expected to be taken up by Congress in early thereby undermining an industry that has grown substantially 2018. Such works programs are important for maritime over the last several years. The Trump administration is commerce and port operations, as well as for flood damage 18 • POLICY SCAN 2018

reduction and environmental restoration. Congress has had CHIP/Medicare Cuts recent success with the reauthorizations of these programs, passing legislation in both 2014 and 2016, and is expected to CHIP funding remains a priority. A deal to fund the program stay on its two-year cycle with this bill. for five years is expected later this month. Under the 2010 “pay-as-you-go” law known as PAYGO, the $1.5 trillion tax HEALTH CARE cut bill deficit would have triggered automatic spending cuts to programs, including a $25 billion cut to Medicare in Health care policy will continue to require congressional 2018 alone. But the House and Senate waived the required attention as members address the ailing Obamacare cuts as part of the CR that became law in December 2017 insurance exchange marketplaces, funding for the children’s preventing a government shutdown. health insurance program (CHIP), potential entitlement reforms that could impact both the Medicare and Medicaid House Speaker Paul Ryan has signaled Republican plans to programs, and maneuvers to rein in drug costs. cut spending on Medicare, Medicaid and welfare programs as a way to trim the federal deficit, but supporters of Obamacare such plans do so at their peril in an election year. Several members of Congress and the administration are also In 2017, Republican factions found themselves unable to looking closely at prescription drug costs. Uncertainty is reconcile differences between senators wanting complete the watchword in Congress as members debate the level Obamacare repeal and those favoring a more measured of government control over health care and the impact of a approach to fixing the current healthcare law. Four separate pullback on insured populations. Senate Obamacare repeal bills failed in 2017. However, the tax legislation signed into law by President Trump removed 2017 vs. 2018 Obamacare Enrollments (healthcare.gov) one of its most major features—health insurance mandate penalties—despite the fears of many moderate Republicans 10,000,000 2017 and Democrats that eliminating the penalty, in combination 9,000,000 2018 with the administration’s October 12 decision to end 8,000,000 cost-sharing subsidy payments, will further destabilize the 7,000,000 exchange marketplaces and raise premium rates. 6,000,000 5,000,000 Market Stabilization 4,000,000 3,000,000 The 39 states using healthcare.gov saw Obamacare 2,000,000 enrollments for 2018 outpace sign-ups for 2017, but fall 1,000,000 short of expectations due to the shortened enrollment season (see attached chart). On November 28, the President 0 reached an agreement with Senate leaders to consider the Alexander-Murray stabilization bill early in 2018. Week Week Week Week Week Week Week Week Week Week Week Week Week 1 2 3 4 5 6 7 8 9 10 11 12 13 While Senator Susan Collins (R-ME) supported the Senate Republican tax cut bill in November in exchange for what Medicaid she said was a promise by the leadership to take up and pass the so-called Alexander-Murray bill and other proposals Medicaid reform was one of the most substantial initiatives to stabilize the health insurance exchange markets under included in the recent Affordable Care Act (ACA) repeal- Obamacare, Speaker Paul Ryan said that he was not a party to and-replace legislative efforts; bills would have impacted such an agreement and did not support such a commitment. not just ACA Medicaid expansion, but would have also Given the Speaker’s refusal to honor the alleged promise imposed per capita caps on states and created block grant to Senator Collins, it remains to be seen what steps, if any, options. However, since Medicaid reform turned out to be Congressional Republicans are prepared to take to stabilize controversial, it seems unlikely, given the looming midterm the finances of the existing ACA health insurance exchanges elections, that Congress will enact substantial Medicaid and thereby control the costs to consumers. reform in 2018. That being said, Medicaid reform may well make another appearance in entitlement reform efforts. On the administrative side, changes to the Medicaid program may come through approval of state requests for waivers from statutory requirements. Such requests may be made under Section 1115 of the Social Security Act. CMS Administrator Seema Verma advised states on Medicaid POLICY SCAN 2018 • 19

waivers in the past, and a number of states have pending filed a legal challenge and legislation was introduced in waiver requests to impose work requirements on many November that the regulation’s changes to payment for Medicaid recipients. Approval of these requests (which is drugs and biologicals purchased under the 340B drug expected) may result in litigation by Medicaid discount program “shall have no force or effect.” We expect beneficiary advocates. drug pricing and the 340B program to be a source of continued legislative and regulatory activity in 2018. Why Obamacare repeal is hard TRANSPORTATION AND INFRASTRUCTURE 1. Politics meets reality. Trump’s stated goal of better coverage at a lower cost is nearly impossible. The Trump administration has indicated that it will release its long awaited infrastructure plan in January. The plan is 2. The math is tough. No Democratic support for expected to lay out principles intended to spur $1 trillion repeal and Senate procedural rules limited the in infrastructure investment from $200 billion in federal scope of what could be changed. funding. Early indications are that the administration plans to divide the $200 billion among four programs: (i) a 3. Entitlements politically challenging. ACA program for states and cities with a focus on local matching provided insurance exchange coverage and funds; (ii) block grants for rural America; (iii) existing expanded Medicaid. Entitlements are relatively easy federal loan programs, and (iv) what is being described as to give and hard to take away. “transformational” projects. 4. Divided GOP. Conservatives sought full repeal; Federal Aviation Administration Reauthorization most moderates and GOP governors with Medicaid expansion wanted to keep it. 5. Bully Pulpit Limitations. Obama’s approval during The six-month extension to keep funding the Federal ACA was 64%. Trump’s approval during the repeal Aviation Administration (FAA) is set to expire on March 31, debate was around 40% and many Republicans see 2018, which means that unless an agreement is reached on limited downside to bucking the president. a long-term reauthorization, another short-term extension will be required. Both the House and Senate reauthorization Many Medicaid stakeholders are also waiting to see whether bills have been reported out of committee but have yet to the Trump administration revisits a Medicaid managed care be considered by the full House and Senate, respectively. rule issued by the Obama administration in May 2016. The The House bill remains stalled over Chairman Bill Shuster’s rule imposed strict new requirements on states moving (R-PA) plan to overhaul the nation’s air traffic control system, their delivery system to managed care, which is now the while the Senate bill has been held up over a provision to predominant delivery system in Medicaid. change training requirements for pilots. 340B Drug Discounts Autonomous Vehicles Pharmaceutical companies are concerned about the growth In 2017, the US House of Representatives passed H.R. 3388, of the 340B Drug Pricing Program that mandates the sale of the Safely Ensuring Lives Future Development and Research outpatient drugs to hospitals and other covered entities at in Vehicle Evolution Act, or the SELF Drive Act. reduced prices saving hospitals between 25 and 50 percent. Hospitals respond that 340B program savings empower The Senate Commerce, Science and Transportation them to meet HRSA’s broad goal of helping the nation’s most Committee has since made progress on its own AV legislation. vulnerable patients and providing comprehensive health While mirroring the House bill in many ways, it also differs services. Congress held hearings in 2017 examining the from the lower chamber’s measure in some key respects. The lack of program oversight. Then the Centers for Medicare Senate will need to iron out details surrounding cybersecurity, & Medicaid Services (CMS) issued a regulation last fall privacy, safety and the exclusion of the trucking industry, all that slashes many 340B hospitals’ Medicare Part B drug of which have temporarily stalled their version. If bipartisan reimbursement by $1.6 billion (almost 30 percent). Hospitals solutions to these issues can be found, AV legislation should be able to get to the President’s desk in 2018. 20 • POLICY SCAN 2018

DEFENSE On the heels of the publication of the White House’s National Security Strategy in December 2017, DOD is likely Sequestration of FY18 defense spending under the Budget to release its National Defense Strategy in January, followed Control Act of 2011 (BCA) could be triggered on January 15, by both its Nuclear Posture Review and Ballistic Missile 2018, if congressional Republicans and Democrats are unable Defense Review in February. All four documents will drive to reach a global deal on increases to existing FY18 defense considerable discussion and debate among defense and and domestic spending caps. President Trump signed the national security thought leaders in the public, private, and FY18 National Defense Authorization Act (NDAA) into law on think tank/nonprofit sectors throughout 2018. December 12, 2017. The FY18 NDAA authorizes $626.4 billion in base defense spending, compared to the BCA-imposed HOMELAND SECURITY/ cap on FY18 base defense spending of $549 billion. CYBERSECURITY Work on the FY19 NDAA and Defense Appropriations Homeland legislation will begin in earnest in Spring 2018. Congressional defense lawmakers will continue to: (i) develop and drive Kirjsten Nielsen was sworn in as the sixth Secretary policies that best position US and coalition forces to of Homeland Security on December 6, 2017. A former effectively and efficiently wage hot and cyber wars against deputy to retired General John Kelly in his former role as multiple global terrorist groups; (ii) address ongoing threats Secretary of the Department of Homeland Security (DHS) to US national security interests posed by multiple state and his current role as White House Chief of Staff, Nielsen, actors; and (iii) promote and push Department of Defense a cybersecurity expert, has been a leading proponent (DOD) acquisition reform and innovation initiatives. of reorganizing and elevating the DHS’s cybersecurity mission. Although the House, on December 11, 2017, passed Modernization and optimization of the DoD’s antiquated legislation calling for such a change at DHS, the Senate has information technology infrastructure, and improvement of yet to focus on the issue and corresponding legislation, the agency’s offensive cyber capabilities, both supported but is expected to in 2018. Whether Congress formally in part by relaxed recruiting requirements for US military mandates the reorganization and elevation of DHS via cyber billets, will be two policy focal points on which the legislation, the agency’s cybersecurity mission will very Trump administration and congressional lawmakers on likely become more robust under Nielsen’s stewardship. both sides of the aisle can work together in (near) seamless harmony in 2018. In his FY19 budget proposal, the President will again request full funding from Congress for the construction of a physical Outline of key change to defense procurement wall on our southern border. And on Capitol Hill, defense, homeland security and intelligence policymakers in both Currently, the DoD has two options for purchasing parties will continue to explore and promote the security commercial off-the-shelf (COTS) products: and economic advantages of technological or other 1. Through the DoD contracting processes (subject alternatives to a physical barrier. Meanwhile, congressional lawmakers are likely to address at least one hot-button-issue to DFARS) wrapped up in the broader border security debate in early 2. Through the General Services Administration 2018—immigration, specifically legislation that would make permanent some form of President Obama’s Deferred Action (GSA) at prices set by the agency for Childhood Arrivals (DACA) policy. The purpose of using online commercial sites is to Cybersecurity ensure the DoD gets the best price without bureaucratic slowdowns. Online purchasing would allow DoD to track With the midterm elections on the near horizon, the security and analyze procurement data, including spending, and reliability of voting systems throughout the US will be at which is critical to operational efficiency, transparency the epicenter of cybersecurity policy debates on Capitol Hill and accountability. and in state legislatures throughout 2018. OMB and GSA will collectively be responsible for developing a plan of implementation and scheduling, and determining which commercial items will be available for purchase. This plan will be carried out over the next few years. Federal procurement of commercial off-the-shelf items is a $53 billion market. POLICY SCAN 2018 • 21

In December 2017, the Jared Kushner-led White House Blackburn (R-TN) has already indicated her intent to Office of American Innovation released its final “Report move her net neutrality framework - the “Open Internet to the President on Federal IT Modernization.” The Preservation Act” - that she introduced in December. overarching goal of the report is to identify efforts House and Senate Democrats will be introducing required of the federal government to “enhance its Congressional Review Act resolutions of disapproval early cybersecurity posture, modernize the Federal IT in 2018. Aside from net neutrality, we can also expect enterprise, and create a more robust partnership” infrastructure package discussions to include telecom between industry stakeholders and the federal related priorities and FCC Chairman Ajit Pai to continue to government. One of the chief focal points of the report is advance his deregulatory agenda. the need for federal agencies to migrate to, and optimize, secure cloud platforms and technologies. Intellectual Property Data breach/privacy and consumer protection issues The Supreme Court is expected to rule on the will be among the leading legislative priorities in constitutionality of an administrative procedure used to the cybersecurity realm in 2018 for key Capitol Hill challenge the validity of patents which could change policymakers. Congress is expected to focus on a the shape of patent litigation. The proceedings are variety of cybersecurity legislation this year, including popular among tech giants, whose lawyers have used the key bills that would: (i) establish threshold security procedure to quash infringement lawsuits based on what requirements for Internet of Things (IoT) devices procured they argue are weak patents that should never have been by the federal government; (ii) require automobile granted in the first place. Expect incumbent tech firms manufacturers to develop cybersecurity plans for self- to closely monitor the arguments and look to Congress driving vehicles; and (iii) create a national data breach should the ruling not go their way. notification standard. FINANCIAL SERVICES TECHNOLOGY Dodd-Frank Regulatory Relief Legislation Social Media Platforms The Senate Banking Committee favorably reported S. 2155, The investigations into Russian meddling in the 2016 the Economic Growth, Regulatory Relief and Consumer election have highlighted the lack of regulation on social Protection Act. This regulatory relief bill has long been media platforms. Representatives from Facebook, Google sought by community banks and credit unions. and Twitter all testified before the House and Senate Financial Services Committee Chairman Jeb Hensarling committees looking into the Russian influence campaign. (R-TX) would prefer to provide even greater regulatory relief Congress appears poised to consider requiring increased than that proposed in the Senate bill, but amending the disclosure of who’s purchasing online political ads. bill and sending it back to the Senate could jeopardize the bipartisan support that allowed it to move forward and be Additionally, Congressional lawmakers, in particular passed by the Senate. those on the Judiciary and Intelligence committees, will continue to explore potential mechanisms by which Bitcoin to regulate social media companies in an effort to mitigate and prevent the exploitation of social media Online platforms that trade Bitcoin and other digital assets platforms by ISIS and other foreign and domestic are likely to face more court battles and regulatory attention terrorist organizations for the purposes of propaganda in 2018. Specifically, Senator Chuck Grassley (R-IA) has dissemination and recruitment. introduced S. 1241, the “Combating Money Laundering, Terrorist Financing, and Counterfeiting Act of 2017,” which Telecom seeks to define anyone issuing, redeeming, or cashing Bitcoin as a financial institution. This would require users The Federal Communications Commission’s (FCC) repeal to comply with the Bank Secrecy Act, 31 U.S.C. § 5312 and of the 2015 Open Internet Order, or the “net neutrality” require them to adopt the same formal reporting procedures rules, has now landed the net neutrality issue back in as financial institutions for the purpose of reporting Congress’ lap.House Energy and Commerce Chairman suspicious transactions. 22 • POLICY SCAN 2018

Flood insurance Senate Health, Education, Labor and Pension Committee Chairman Lamar Alexander (R-TN), himself a former The long-term authorization of the National Flood Insurance Secretary of Education as well as a former president of the Program (NFIP), which expired on September 30, 2017, was University of Tennessee, has stated his strong desire to extended on a temporary basis in each of the continuing complete work on a reauthorization bill in 2018. However, resolutions that the Congress passed, and the President his committee is taking a much more measured approach signed, this past fall to fund the federal government’s than is Foxx’s committee. operations and avoid a shutdown. Alexander will hold additional hearings in the first months However, the House and Senate NFIP reauthorization of 2018, and perhaps schedule markups on specific proposals take very different approaches to funding the initiatives, such as simplifying student financial aid program program as well as to such issues as how best to promote applications. To get to a comprehensive bill, however, greater participation by private-sector insurers in the provision Alexander knows he must work in a bipartisan way with of flood insurance. These differences must be resolved before Ranking Democrat Patty Murray (D-WA) if he is ultimately a long-term reauthorization can be achieved. able to move a bill to the Senate floor that could get the necessary 60 votes for Senate passage. HIGHER EDUCATION NATIVE AMERICAN Regulations This year will be a busy one for the US Department of Appointments Education (ED) in rewriting or eliminating various federal regulations that impact higher education institutions. As with much of the federal bureaucracy, the current Secretary Betsy DeVos has finally put in place several new administration has been slow to appoint political leadership senior hires at the ED, and has announced plans for moving within the Department of the Interior, the agency with ahead on changes to several Obama-era regulations. primary jurisdiction over American Indian and Alaska DeVos has announced that the ED plans to issue a notice Native tribal affairs. That said, recent nominees, including of proposed rulemaking in March to clarify existing Title IX Tara Sweeney, the President’s choice for Assistant regulations regarding campus sexual assault. Secretary-Indian Affairs, have been advancing through the confirmation process at a faster pace and could The ED also hopes to finalize recommendations from two formally take their positions in January. Meanwhile, other negotiated rulemaking panels—on “gainful employment” key positions, among them the Deputy Solicitor for Indian regulations and “borrower defense to repayment” Affairs, remain vacant with no appointee in sight. regulations—that met in late 2017. The ED hopes to issue a call for public comments on the recommended changes Consistent with its broader policy goals, the administration during late spring or early summer. has expressed a willingness to work with tribes to facilitate energy development on tribal lands. However, other issues Higher Education Act of importance to tribes, including trust land acquisition, national monument and sacred site preservation, and Congress may make a serious effort in 2018 to reauthorize gaming-related economic development, appear to be at the Higher Education Act for the first time in almost a odds with the Administration’s priorities. decade. House Education and Workforce Chairwoman Virginia Foxx (R-NC) got the ball rolling in November 2017 Congressional Activity with the introduction of the Promoting Real Opportunity, Success, and Prosperity through Education Reform Act At the other end of Pennsylvania Avenue, the Senate and (PROSPER Act). She then moved swiftly to a December its Committee on Indian Affairs have been fairly busy markup of the 500-plus-page bill and, on December 12, holding hearings and passing legislation on a variety of the committee approved the bill on a party line vote. matters, including public safety, protection of cultural Foxx stated that she hopes to get House floor time for resources, and energy development/regulatory reform. consideration of the bill during the first few months Meanwhile, the House Natural Resources Committee has of 2018. waded into more controversial waters, including holding contentious hearings on federal recognition and land POLICY SCAN 2018 • 23

acquisition issues. The Indian Country is also keen to see including both cutting back and shifting certain funding the Special Diabetes Program for Indians reauthorized after through private and NGO channels. These proposed the current short term fix expires later this month. While reforms are likely to face resistance from key authorizers and there is significant bi-partisan support for this program, appropriators on both sides of the aisle - especially in light Congress keeps kicking the can down the road on securing of the implications of the proposed reforms for Congress’ funding for the program. existing foreign aid oversight role. Congressional Activity Iran Deal The administration has signaled a desire to be generally The Joint Comprehensive Plan of Action (JCPOA, aka Iran supportive of Indian Water Settlements in its recent testimony Nuclear Deal) will again be a leading topic of debate within on settlement legislation for the Hualapai Tribe in Arizona the Administration and on Capitol Hill in 2018. President and the Navajo Nation in Utah, but in doing so, has also made Trump will be faced with several deadlines related to the it clear that it will take a hard look at the costs associated JCPOA in mid-January, including a requirement to certify with any settlement, and similar to its views on new storage, - or not - that Tehran is meeting its obligations under the will seek to have state and local entities assume a larger terms of the agreement. Although international inspectors share of these costs. The Department also appears to be who have visited Iran’s nuclear facilities have stated that willing to tolerate the inclusion of new limitations on tribal the country is complying with the deal, the President opted land acquisition in this water settlement. Success in moving not to certify Iranian compliance in mid-October of 2018. any Indian Water Settlement forward will depend on close Additionally, between January 12 and 17, President Trump adherence to the Department’s Criteria and Procedures for must decide whether to extend temporary waivers of Indian Water Rights Settlements. certain US sanctions against Iran, assessments that must be made every 120 days under the agreement. Were the FOREIGN RELATIONS Administration to refuse to extend the waivers and re- impose strong sanctions against Iran, Iran would very likely The Trump administration will continue to promote its take the position that the US is in breach of the JCPOA and “America First” foreign policy mantra in 2018. However, when openly restart its nuclear program. Consensus appears to assessed at the operational and implementation level, the exist among leading Republican and Democratic foreign 2017 Trump foreign policy doctrine was more closely aligned policymakers on Capitol Hill that the US should not withdraw with that of his immediate past Republican predecessor than from the JCPOA, as imperfect as it may be. Bipartisan advertised. On Capitol Hill, lawmakers on the Senate Foreign legislation that would take a hard line against Iran without Relations Committee and House Foreign Affairs Committee violating the terms of the deal, and provide political cover will continue to assess and debate US active and passive to the Administration to remain in the deal, is likely to be involvement in conflicts throughout the world, related and introduced in early 2018. independent humanitarian crises, the value or lack thereof to US interests of existing bilateral and multilateral trade deals, Foreign Military Sales and US participation in various intergovernmental alliances, among a diverse array of other issues. Support is growing among Republican members of Congress on committees of jurisdiction to reform the US Foreign United Nations Military Sales (FMS) process. Industry and other stakeholders will be actively engaged with Congress in 2018 as the body On December 24, 2017, US Ambassador to the United decides whether to act to impose changes to the FMS Nations (UN) Nikki Haley announced that the US Mission process, including (i) the reduction of restrictions on the sale to the UN has negotiated a $285 million cut in the UN’s and provision of US arms, defense equipment and services, 2018-2019 budget, in an effort to mitigate overspending and and military training to certain foreign governments and (ii) increase efficiencies within the global organization. The US the increase of restrictions or conditions related to the sale contributes more than any other nation in the world to the and provision of such items to foreign governments related to UN’s annual budget. Relatedly, the Trump administration actual or perceived humans rights practices. and its State Department have signaled a change in the US government’s use of foreign aid and development funds, 24 • POLICY SCAN 2018

Authorization for the Use of Military Force Farm Bill At present, the US government justifies its military actions The Farm Bill, normally updated every five years, will expire abroad against ISIS and other terrorist organizations on the in 2018. House Agriculture Committee Chairman Mike basis of the 2001 Authorization for the Use of Military Force Conaway (R-TX) has announced plans to move quickly in (AUMF), which was enacted in September 2001 in response 2018 to mark up the new Farm Bill that governs federal to the 9/11 attacks. Support for a new, more restrictive AUMF programs for crop subsidies and insurance; federal farm governing US military actions in the Global War on Terrorism loan programs; USDA nutrition programs, including the has increased on Capitol Hill in recent years, including Food Stamp program (Supplement Nutrition Assistance among military veterans in both parties. The debate Program - SNAP); conservation programs; and USDA- over passage of a new AUMF will continue to consume funded research and education programs for agriculture, Congressional lawmakers in 2018. Key topics within this forestry and natural resources. broader discussion will include the Administration’s ability to Conaway has already held numerous hearings in his deploy greatly overextended US Special Operations Forces Committee leading up to the Committee markups he hopes throughout the world and to provide targeting and logistical to conduct in the first quarter of 2018, with an ambitious assistance to counterterrorism partners. schedule of taking the Committee-approved bill to the House floor by March. Major disagreements will no doubt North Korea emerge in the Committee on proposed changes in the SNAP program. Republicans hope to rein in the program by Perhaps the most significant foreign policy challenge that giving states more flexibility to impose work requirements the Trump Administration, and to a lesser extent Congress, and stricter eligibility requirements (similar to what Speaker must continue to address in 2018 is the ongoing aggressive Paul Ryan plans to propose for the federal welfare program). and unabashed development of nuclear strike capabilities Other controversial issues will include treatment of by a rogue North Korea. Secretary of Defense James Mattis genetically modified crops, labeling requirements for meat and Secretary of State Rex Tillerson insist that a diplomatic and other products imported into the US, and the cost of the resolution to the standoff exists, despite increasing tensions crop subsidy and crop insurance programs. as the US leads UN sanctions actions, and assesses military interventions options, against North Korea in response to the Consideration of the Farm Bill is rarely a partisan debate, latter’s refusal to end intercontinental ballistic missile tests but rather one based on regions of the country where with the stated goal of delivering a nuclear payload to the the legislators live (i.e., rural versus urban) and those who continental US. support continued spending on farm subsidy programs versus budget hawks. AGRICULTURE Sen. Chuck Grassley (R-IA) says senators are three months behind schedule in drafting the next farm bill Regulations and that he had previously anticipated the Agriculture Committee would have advanced legislation before In 2018, look for Secretary of Agriculture Sonny Perdue to Christmas. “We can’t horse around any longer,” Grassley continue the USDA push to ease regulatory requirements. told reporters on a conference call. Senate Agriculture The USDA has in the works over 25 rulemakings to rewrite Chairman Pat Roberts (R-KS.) said this weekend that his or eliminate current regulations with the aim of reducing panel aims to finish the bill “blueprint” by February and to paperwork for nutrition programs, consolidating Farm bring the measure to the floor in early spring. Service Agency debt collection, easing requirements on retailers that accept food stamps to stock healthy foods, easing up on how food manufacturers label products containing genetically engineered ingredients, and some new standards for organic livestock production. POLICY SCAN 2018 • 25

Governors There will be 36 gubernatorial elections in 2018, 9 Democratic a century ago. Republicans have total control over 25 states- and 26 Republican and 1 Independent . Given that 2020 is a both branches of the legislature and the Governor’s office, redistricting year, these races will have national implications. plus another two states where they can override a democrat In most states, the legislature redraws congressional districts, veto. The Democrats have total control in only 6 states, and a while the governor has veto power. Republicans currently veto proof majorities to override a republican Governor’s Vero hold 33 governorships, one shy of the historic high set nearly in 2 states. GOVERNORS TOSS UP State Democratic State Republican FL Scott (open) MN Dayton (open) IL Bruce Rauner ME LePage (open) CT Malloy (open) MI Snyder (open) NV Sandoval (open) AK Bill Walker (I) GOVERNORS LEANERS State Republican State Democratic NH Chris Sununu OH Kasich (open) CO Hickenlooper (open) WI Scott Walker PA Thomas Wolf NM Martinez (open) GOVERNORS LIKELY State Democratic State Republican State Republican AZ Douglas Ducy TN Haslam (open) OR Katherine Brown KS Brownback (open) VT Phil Scott MA Charlie Baker MD Larry Hogan RI Gina Raimondo GOVERNORS SOLID State Republican State Republican State Democratic AL Kay Ivey OK Fallin (open) AR Asa Hutchinson SD Daugaard (open) CA Brown (open) GA Deal (open) SC Henry McMaster HI David Ige ID Otter (open) TX Greg Abbott NY Andrew Cuomo IA Kim Reynolds WY Mead (open) NE Pete Rickets 26 • POLICY SCAN 2018

A look ahead at issues facing local governments with former Mayors Stephanie Rawlings-Blake of Baltimore and Michael Nutter of Philadelphia Michael Nutter Stephanie Rawlings-Blake Senior Advisor Senior Advisor Climate change/climate resilience Immigration Increased severe storm events, droughts, prolonged forest The impact on cities of any federal policy to penalize fires, sea level change, air pollution, green house gases, so called “sanctuary cities” will create major national the rising overall temperature in our country and on the battles, not only about immigration policy, but also a planet are many of the challenges that we collectively re-examination of federalism in the context of the Trump face. The President and his Administration continue to Administration. Mayors and cities have filed lawsuits, there repeal or dilute the impact of many Obama era policies are active public demonstrations of resistance and civil on air, water and emissions, while local governments disobedience across the country. Threats of religious bans, are fully committed to their own climate resilience plans walls being built and other proposed policies are very often and generally reject the President’s call for America to at odds with public opinion, and create significant anxiety withdraw from the Paris Agreement. In fact, Mayors are for undocumented individuals and their families, but also even more engaged and enthusiastic about these issues in the business community as major industries would be and this work as demonstrated by the continued growth disrupted if draconian measures are adopted as opposed and activity as demonstrated by the C40 Mayors and to the creation of a unified and functional Immigration their work, as well as the continued efforts by the U. S. and Citizenship policy that is consistent and applied fairly Conference of Mayors and the work of their Environment across the United States. Committee and the Energy Independence and Climate Change Task Force. Mayors and other local officials in America and around the world will provide strong leadership on these issues, and will share best practices and collaborate on effective implementation strategies. POLICY SCAN 2018 • 27

Domestic and international terrorism Infrastructure funding Most terrorism attacks occur in cities because of their Improving our roads and bridges has been discussed density, the greater opportunity for the terrorist to hurt or numerous times over the past year during the Presidential kill large numbers of people and because media coverage election season and since, but nothing much has will be highlighted if an act occurs in a city with a decent come from the discussion. The sheer magnitude of the sized media market for exposure to the country and the problem probably keeps most people from having serious world. While most cities have coordinated emergency discussion, and no one really knows what the federal, or response plans in place, it is usually local law enforcement even state governments could or would do in response and local emergency responders who are called first, often to any serious and legitimate plan that the current without them having the full knowledge of exactly what Administration in D.C. might put forward. the nature of the emergency might be, but rather they are just responding to a frantic 911 call and proceed based Workplace relations and interactions on the information supplied. Domestic terrorism remains a concern because some Americans or others not born No sector, no industry or organization is immune from here but have been in America for a substantial amount of inappropriate interactions between people, regardless time are often becoming radicalized without even leaving of gender or gender preference. There will be continued the USA. Day-to-Day street and gang violence remains a pressure to increase training, clarity on rules of conduct, significant concern because of the devastating toll these settlement agreement reform and a renewed focus on actions have on the survivor family members. In this workplace culture and accountability to report incidents regard, Mayors are playing a dual role of focusing on street to the appropriate supervisor, Board or other authority – crime, while also being a critical partner in combatting similar to the “See Something, Say Something” campaign. international terrorism, which could appear at any time, in any town. Underskilled citizens and under-employment/ no employment for citizens Police and community relations The impact of automation on the economy of the US, While primarily a local issue, has in fact become a national which is often a topic of discussion among academics, issue in a variety of ways. The number of high profile but we really need business leaders and other thought and controversial officer involved shootings of primarily leaders to step forward and provide insight into the vast African American men, coupled with virtually non-existant and growing realm of automation, what it means to accountability or “justice” for the family of the deceased, workers today and what it will mean to everyone (whether and very few convictions of Police Officers who may working or not) in the future. It must be anticipated that have wrongfully killed a citizen has created a very tense some people will lose the job they have, may get trained environment for citizens and police officers. for the next new job, may be unemployed for some period of time before they catch back up to the latest innovations, POPULATION BY PARTY OF MAYOR Democratic mayors significantly outnumber Republican (100 LARGEST CITIES) mayors in America’s 100 largest cities, and the Democratic Party’s control over these mayoral offices Party Affiliation of Population Percent of Total is greater than its control over any other major political Mayor Population position. The party’s 67 percent of control is higher 78.34% than its control over the U.S. Senate (44 percent), U.S. Democratic 48,312,047 House (43 percent), state legislatures (43 percent), 18.33% and governorships (36 percent). Governing magazine Republican 11,305,375 2.11% attributed this success to the fact that populations of 1.22% cities tend to be socially liberal Independent 1,299,684 Unknown 752,523 28 • POLICY SCAN 2018

or may not EVER find work in their chosen profession and Hospital medical responders and many others are already will either start over again, or will be left behind in the wearing thin, with no significant answers, proposals or real marketplace. There is a great need for full public discussion dialogue being put forward at the national level, in an effort and disclosure regarding the rapidly changing economy of to get some key points made to policy makers and citizens. the US and the world. Business, government and unionized The reality is that America has really not come to grips with worker Leadership must have honest conversations with our drug/alcohol/substance abuse issues in a meaningful, the American people and the foreign Nationals who work committed and focused manner, not just on the law and with them regarding how we’re all going to get along in this order side, but even more importantly, on the human ever changing world. capital/human potential side of that desperately important part of the equation. We must focus on prevention Opioids and public health and public safety programs, education programs and efforts to reduce the stigma associated with these personal challenges. These issues will dominate a great deal of the public dialogue, especially in light of recent changes in various provisions of the Affordable Care Act. One of the most important AND complicated pieces of legislation in recent times. People are dying in the streets of our cities due to this scourge. Police Depts., Fire Dept Emergency personnel, POLICY SCAN 2018 • 29

DENTONS 50 STATE POLICY SCAN The Dentons 50 Policy Scan is a comprehensive look shipped to Asian markets. Most recently, the Governor at the prevailing issues, challenges, and opportunities announced that the Alaska Gasoline Development Corp. before state and local governments from coast to coast. had signed a joint agreement with certain Chinese firms Written and researched by our unparalleled team of to explore advancing the project through joint financing. diverse professionals, lawyers, and lobbyists, the 2018 Policy Scan provides an window into the upcoming ARIZONA policy debates in state capitols that will have profound economic and commercial impacts in the months • The fight around funding for K–12 education will ahead. From autonomous vehicles to medical cannabis continue, both in terms of how much is needed and and everything in between, we hope that you will find how it’s spent. An education sales tax sunsets in four this document useful as you continue to grow your years and there is talk of trying to push an extension business, expand your market, and plan for the future. measure to voters in 2018, but Governor Doug Ducey As always, our Dentons 50 team stands ready, willing, and many GOP legislators are hesitant. A sticking and able to assist you pursue your goals from sea point is whether it would simply be an extension or an to shining sea as an unprecedented force multiplier extension and an increase. The Governor has vocally capable of delivering the perfect public policy and opposed the latter. advocacy solutions your business needs to thrive. • W ater will most likely be a major issue this year. The state ALABAMA faces severe water issues and this trend will continue in the decades to come. The Governor continues to try • The Alabama Medicaid Agency is likely facing significant and overhaul how the state’s water supply is managed budget shortfalls because of increased costs and the and who takes responsibility for managing it, and his loss of one-time funds in previous budgets. Program ongoing conversations with multiple entities, including administration already is generally considered to be a state, tribal, local, federal and private interests, could bare-bones operation with little-to-no optional programs result in some major changes. or services, so we expect there to be considerable debate on the solutions or cuts that Medicaid and the ARKANSAS Governor’s Office propose. • Because of persistent concerns related to the • T he issue of infrastructure investment for roads and Arkansas procurement process, the legislature hired bridges, including a possible increase in the gas a consulting firm to evaluate the state’s procurement tax, will likely be deferred to the 2019 session. In the process and make recommendations for procurement meantime, the legislative leadership has assembled an reform. Ikaso is expected to issue a formal report in infrastructure task force to assess over the course of the late March of 2018. Problems with procurement have 2018 session, the state’s needs and possible solutions, been pervasive—from the creation of procurement with an eye toward identifying priorities for 2019. documents to the qualifications of evaluators and other issues surrounding the evaluation process. ALASKA • A tort reform ballot initiative was referred to the people • G overnor Bill Walker has long advocated for the by the Arkansas General Assembly during the 2017 development of an 800-mile natural gas pipeline to run legislative session and will appear on the 2018 ballot. parallel to the Trans-Alaska Pipeline from the Prudhoe The initiative proposes to give the legislature rulemaking Bay oil fields down to the Cook Inlet in southern Alaska, authority for the court; cap punitive and non-economic where the gas would be loaded into LNG tankers and damages; and limit contingency fees to 33 percent of net judgments. 30 • POLICY SCAN 2018

CALIFORNIA quietly assembling a plan to offer sports betting on both professional and college sports quickly following the • R ecreational use of marijuana became legal in California Court’s announcement sometime next year. While the on January 1, 2018. The state already has many laws volatility of revenue from sports betting is well known, and regulations in place but there are still a multitude Americans spend an estimated $150 billion annually on of issues to address, especially in two areas subject to sports betting through illegal and offshore sportsbooks, federal regulation: banking and taxes. and Delaware is quickly positioning itself to take advantage of this potential new market. • L ast year saw the passage of several pieces of legislation attempting to deal with the affordable housing shortage. • An unexpected $55 million windfall from 2017 tax Incoming Senate President Pro Tem Kevin de León is a revenues will undoubtedly set up an argument among champion for affordable housing and is sure to continue the Delaware Legislature on how best to spend these to pursue this issue. surplus funds. One group, the newly formed Coalition for Delaware’s Kids is asking lawmakers to expand the state’s COLORADO pre-kindergarten program, open a recovery high school for drug-addicted students, and invest in a federally • Colorado continues to face the challenges of fully recommended program for reducing gun violence funding the state Public Employees’ Retirement among young people in Wilmington among other related Association (PERA). The General Assembly is prepared projects. The proposal has the support of state Attorney to review a package of proposed changes to PERA, General Matt Denn, and its proponents expect to make including modifying the benefits of current retirees, their voices heard on the matter in 2018. members and future members; increasing contributions to the fund; and ensuring the equitable alignment of FLORIDA “input” (participant contributions and service credit) with “output” (benefits paid out). • At year-end 2017 upwards of 240,000 Hurricane Irma and Maria evacuees from Puerto Rico and the Virgin • During the 2017 session, a Sales and Use Tax Islands had reached landfall in Florida. There is great Simplification Task Force was created by legislative debate over how many more will come and, of those, resolution to study options at the state and local levels. how many will stay permanently. The latest economic The task force produced a single bill to determine forecast from the state legislature estimates that roughly whether an option for administrative simplification 55,000 evacuees will stay in Florida long term. However can be identified that would also preserve home there are some, including a member of the Florida rule municipalities’ choice in how they manage their House of Representatives who is originally from Puerto local sales tax. Municipalities will monitor this specific Rico, who believe the number of evacuees who strike legislation, and any other bills related to sales tax fresh roots in the state will be dramatically higher. So far simplification, to ensure that implementing an electronic more than 9,000 K–12 evacuee students have enrolled in tax simplification system does not create negative fiscal Florida public schools. impacts for local governments. • S tate Senate President Joe Negron’s top priority is to CONNECTICUT pass legislation to provide full funding for Bright Futures Scholarships—with the highest level merit-based • Connecticut’s Special Transportation Fund, which scholarship paying 100 percent of tuition and fees at a provides financing for transportation infrastructure public university and the lower-level scholarship paying projects across the state, is on the brink of insolvency, 75 percent of public university tuition and fees. (The and tolls are being considered to keep it afloat. Legislation scholarships will pay an equivalent amount to private, enabling tolls was just a handful of votes shy of passage in nonprofit universities in the state.) Negron wants Florida’s 2017, and the bill will likely be reintroduced in this session. public universities to have the national academic prominence of such esteemed state institutions as the DELAWARE University of Virginia, the University of North Carolina at Chapel Hill and the University of California, Berkeley. • As the nation awaits the United States Supreme Court’s decision concerning the legality of a federal nationwide ban on state licensed sports betting, Delaware has been POLICY SCAN 2018 • 31

GEORGIA IDAHO • 2018 will be a wide-open election year in Georgia. • This is an election year for all 105 lawmakers in Idaho, Governor Nathan Deal is term-limited from running many of whom wish to deliver a tax cut to their again. The Republican field includes Lieutenant Governor constituents before they leave Boise at the end of March. Casey Cagle, Georgia Secretary of State Brian Kemp, There is considerable angst in both the House and Senate State Senator Hunter Hill, State Senator Michael Williams regarding Governor’s Butch Otter’s decision last year to and businessman and former Navy SEAL Clay Tippins. veto the repeal of the state’s 6 percent tax on groceries. Democratic aspirants include State House Minority Leader The cut would have saved residents $80 million, but Gov. Stacey Abrams and State Representative Stacey Evans. Otter said the state couldn’t afford the revenue hit. In addition to the Governor’s race, all state constitutional offices are up for election. • Like many states, Idaho, which did not expand Medicaid post-ACA, has been dealing with a population stuck in the • On the legislative front, transit governance, rural coverage gap. Most estimates peg this at 75,000 people development and the teachers’ retirement system or so. Despite attempts in recent years to fix this coverage are expected to be front and center when the gap, not enough votes have existed to resolve it, although General Assembly convenes in January. The House of a recent proposal to issue waivers for about half the gap Representatives has been hard at work in committee to population has been gaining political traction. improve transit governance and enhance state funding of transit in Metro Atlanta as well as throughout the state. ILLINOIS Additionally, the Georgia Rural Development Council has proposed legislation that includes providing tax • The No. 1 issue in Illinois is passing another operating credits to businesses relocating to rural areas, expanding budget. Prior to June 2017, the state operated without broadband service and improving rural healthcare. a budget for about two years, causing it to become Finally, to keep its pension fund solvent, the teachers’ seriously delinquent in paying its bills and leaving its retirement system is going to require approval of an economic future and growth in doubt. additional $350 million to $400 million. • The second-most-important issue is the critical need to HAWAII develop a capital plan for maintaining the state’s roads, highways and other infrastructure priorities. It’s been • In 2015, Hawaii Governor David Ige set an electricity over three years since the passage of a capital plan production goal of 100 percent renewable energy by but the time for action has arrived with the state’s most 2045. Currently, only 26 percent of electricity sales recent budget threatening to pull hundreds of millions of are from renewable energy sources. Electrical grid dollars away from road repairs to pay for other expenses. modernization, upgrading aged utility power generators and reassessing the role of public utilities are key areas INDIANA for the Legislature to address if the state is to meet its renewable energy goals. • Governor Eric Holcomb has asked the General Assembly to allow for public testing of autonomous • A irbnb-style short-term vacation rentals by homeowners vehicles, and Representative Ed Soliday, who chairs have been an explosive political and legislative issue over the House’s Roads and Transportation Committee will the past few years. While hotel visitors pay a 10.25 percent introduce a bill this session. The bill, in part, would transient accommodations tax, short-term vacation home create a four- to five-member task force that would renters do not, and measures to tax such rentals could consider AV testing requests. Anyone who wants to test generate about $100 million in new revenue. Land use and a fully autonomous vehicles on a public road would zoning impacts are another issue where neighborhoods have to obtain the task force’s approval. not zoned for commercial/tourism purposes have found themselves inundated with vacation renters. • L ong-running fights over Sunday alcohol sales and the sale of cold beer at grocery and convenience stores will spill over from a two-year summer study committee assigned to look at these issues. In its first year, the interim committee voted to recommend legalizing 32 • POLICY SCAN 2018

Sunday sales but only from noon till 8 p.m. However, • Expect significant discussion and potential action on the prospect of an expansion of the sale of cold beer tax reform, infrastructure funding and government-red- failed when it did not receive enough votes for a tape cutting. If scandals are still dominating the news full recommendation. cycle, also expect to hear a lot about ethics reform, workplace protections and calls for legal action against IOWA public officials. • I owa is one of a handful of states that allows individuals LOUISIANA to deduct the total amount of their federal taxes from their state tax returns. Assuming that federal tax reform • I t’s all about that budget, ‘bout that budget. Louisiana is results in lower federal tax bills for many Iowans, this will stressing over a looming fiscal cliff of roughly $1.2 billion, inversely affect state tax revenue, creating a revenue which will materialize on July 1, 2018, when “temporary” windfall. Expect an effort to redirect that bonanza into tax increases approved in 2016 are set to expire. Any tax state tax cuts heavily focused on middle-class Iowans. code changes in 2018 will require a special legislative session. A big portion of the billion-dollar shortfall will • Governor Kim Reynolds has made workforce result from expiration of the “temporary” one-cent state development and particularly the building of skill sets sales tax, when the state sales tax drops from 5 percent that are highly employable but do not require four-year to 4 percent and some sales tax exemptions become college degrees her No. 1 priority for the 2018 session. effective again. Currently, Louisiana has the highest The legislation will take on many forms, but all will be average sales tax in the nation—10 percent when local designed to alleviate a skills gap that has left thousands taxes are included. of jobs currently unfilled. • S ome recently announced budget-patching proposals KANSAS include: increasing the individual income tax for those who itemize on their personal income-tax forms by • A fter a controversial state Supreme Court ruling, the (i) cutting in half the percentage of federal excess legislature will be tasked with finding an additional $600 itemized deductions they can deduct; and (ii) changing million for Kansas schools by April 1, 2018, or risk a court- the brackets for calculating the individual income tax ordered statewide shut down of all public schools. This (boosting taxes on middle- and upper-income earners to will surely lead to intense discussions surrounding the raise estimated $500 million a year). Another proposal state budget, potentially affecting not only tax rates but would institute new state sales taxes on certain services, procurement as well. such as cable television and streaming services, debt collection services, and repair services, to raise about • E conomic development incentives will be a hot topic in $200 million a year. this year’s legislative session. Amid growing concerns over lack of transparency and measurable outcomes, the MAINE 2018 legislature will likely make significant changes to the state’s popular STAR bond incentive program, which • Maine voters recently approved a citizen-initiated petition has been widely used to spur economic investment in to expand Medicaid in the state, and the legislature will projects across the state. need to find the estimated $55 million needed to fund the expansion. Governor Paul LePage has indicated that he KENTUCKY will not agree to new taxes or tapping the state’s “rainy day fund” to pay for the expansion. • G overnor Matt Bevin and legislative leaders have undertaken an ambitious effort in recent months to • The legislature will consider budgets to supplement tackle a ballooning $40–60 billion deficit in the public the 2018-2019 Biennial Budget to ensure that it remains employee pension system, to ensure its ability to in balance, but are also expected to set new spending pay benefits to retirees over the next 30 years. The priorities, such as a focus on opioid abuse prevention Governor’s proposed solution would be to transition the and treatment. system from a traditional defined benefit plan to a 401(k)- type defined contribution plan. POLICY SCAN 2018 • 33

MARYLAND MINNESOTA • Paid sick leave will be a major issue again after Governor • I n an attempt to force a renegotiation of the budget Larry Hogan vetoed last year’s bill. The Governor has and tax bills he signed at the end of the 2017 legislative since announced another proposal that will be introduced session, Governor Mark Dayton vetoed the budgets on the first day of the 2018 session. However, legislative for the Minnesota House and Senate. Instead of leadership is expected to pursue a veto override. renegotiating the budget, the House and Senate sued the Governor, asserting that he was, for all intents • The effects of the federal tax plan on the state’s health and purposes, attempting to eliminate a branch of insurance program and state budget will be front and government. The Governor has since indicated that he center. Actions likely will be taken to preserve health will accept and sign into law their budget during the care coverage for Marylanders who might otherwise lose 2018 session. The legislature will need to move quickly it and to protect programs that might be affected by to get a budget to the Governor if they are to keep their lower- than-expected federal and state revenues. operations running. MASSACHUSETTS • M innesota’s November budgetary forecast indicated a $188 million deficit for the current 2018–2019 biennium, • The state Senate in November 2017 passed a very and a $586 million deficit for 2020–2021. The forecast progressive bill focused on health care cost containment. is based upon current state and federal law and leaves The House, which is more centrist, will now examine the a $178 million cost to the state to cover the federally bill very closely to determine its own approach. Various unfunded Children’s Health Insurance Plan(CHIP) but measures included in the Senate version include studying fails to acknowledge any passage of a new federal tax options for establishing a single-payer system in the bill. Along with addressing the budget, the legislature will state, addressing price disparities among providers, and also likely face a need to pass some type of federal tax increasing regulation of the pharmaceutical industry. conformity legislation to align the state’s tax collection system with changes adopted by the federal government. • All eyes are on investigations into Senator Stanley Rosenberg, who has given up his post as Senate MISSISSIPPI President while internal and external investigations look into allegations of sexual harassment and assault against • Mississippi has one of the most codified Medicaid his spouse. An Acting Senate President has been named programs in the country, and the state’s Division of while these investigations play out. Medicaid’s authorization is set to sunset on July 1, 2018. This puts into play not only authorization for the agency’s MICHIGAN continued existence, but also the details regarding provider rates, covered services and managed care. • Proponents of an initiative to eliminate prevailing wage Much of the 2018 session will focus on moving that laws in Michigan have collected enough signatures to put language forward. the referendum on the ballot during the general election in November. To preempt the ballot initiative, the legislature • A group of business leaders has been waging a will debate eliminating the state’s Prevailing Wage law, an multi-year campaign to encourage more funding for issue that will pit unions against the state’s Chamber of highway and bridge infrastructure needs. However, the Commerce and business community at large. legislature’s anti-tax increase posture has presented challenges. The debate is expected to continue. • A lready underway in Michigan is an attempt to increase broadband in the rural areas by passing legislation MISSOURI that would streamline county and city permit fees. In addition, a debate has begun about to streamline the • Although the Missouri General Assembly passed permitting of wireless broadband transmitters on poles a right-to-work measure last year, the labor unions and buildings to help bridge the Internet gap in urban collected enough signatures to put a “citizen’s veto” on areas. The argument is that such expansion will lead to the November 2018 statewide ballot. We expect the increased economic development statewide. Republican majority to try to pass a bill that will move up the “citizen’s veto” to the August 2018 ballot in the hopes of reducing its chance of passage. 34 • POLICY SCAN 2018

• Many of Missouri’s rural legislators would like to get rid of NEVADA the state’s prevailing wage laws, which they believe cost local governments too much money. Democrats and • As the state’s revenues continue to thrive off of pro-labor Republicans will attempt to block a repeal of the sales of recreational marijuana, many of the such laws. departments that regulate the nascent industry are still having issues navigating the process. For example, MONTANA amid fears that stores were quickly running out of product to sell, the Department of Taxation issued • While the Montana legislature will not meet in 2018, the emergency regulations that paved the way for a larger recent federal tax overhaul is expected to cut into that group of businesses to apply for licenses to distribute state’s revenue by approximately $46 million in 2018 marijuana, which had been the exclusive right of as reported by the Montana Department of Revenue. liquor distributors. An appeal by the Independent Moreover, annual losses are expected to increase to Alcohol Distributors of Nevada resulted in the Nevada $76.2 million in 2019 before gradually decreasing to a Supreme Court enjoining the state from issuing loss of $67.3 million in 2021. The majority of losses in the distribution licenses to anyone other than liquor coming year are expected to come courtesy of the new wholesalers. Another area of controversy involves pass-through deduction championed by US Senator the legality of “marijuana lounges.” This will be an Steve Daines, and will pose substantial challenges ongoing process and will need to be monitored and for a state already struggling with filling existing amended continuously. budgetary deficits. • A successful 2016 ballot initiative aimed at breaking • The uncertain future of federal funding for the Children’s up NV Energy’s monopoly and establishing the legal Health Insurance Program could threaten the healthcare framework for a deregulated electricity market now of 24,000 Montana children if the federal government requires a second passage in the 2018 election. This does not quickly arrive at a longer term extension than hotly contested issue should see quite a bit of money the stopgap measure approved in December 2017. pouring in from both sides, including NV Energy and the Montana Governor Steve Bullock has already joined a labor unions. bipartisan group of governors nationwide in pressing Congress for a reliable extension to the program. NEW HAMPSHIRE NEBRASKA • W ith New Hampshire’s Medicaid expansion program, known as the Premium Assistance Program, scheduled • A small cell bill was introduced last year by the cell to sunset at the end of 2018, no vote will be bigger phone companies and discussion on a statewide next year than what will happen to the nearly 50,000 streamlined permitting process will carry over into the residents who are currently enrolled. 2018 session. Ensuring that every Nebraskan has access to broadband speed Internet is also a hot topic, with • Other high priority areas of focus will include legislation solutions ranging from expanding the contribution base to cope with the state’s opioid epidemic and a need and allowable uses of the Nebraska Universal Service for additional workforce development and job training, Fund, to public-private partnerships (P3s), to a push as the state faces hiring challenges with its 2.7 percent from public power companies to be allowed to serve unemployment rate. New Hampshire passed a two-year electric customers with fiber to the premises (FTTP) budget last June, so budget issues are not expected solutions. The area spanning Kansas, Missouri, Nebraska to surface. and Iowa has dubbed itself “Silicon Prairie” in hopes of growing the economy with tech startups. NEW JERSEY • D rone legislation will spark discussion of privacy • Governor-elect Phil Murphy has indicated he will work concerns; the use of drones by law enforcement; barring with the legislature to sign a bill legalizing marijuana within the use of drones over prisons, jails and schools, or to 100 days of taking office. Other key priorities for the new impede hunters or harass livestock; and banning the use Governor and Democrat-controlled legislature include of weaponized drones. instituting a “millionaire’s tax” on high-income earners, gradually raising the state’s minimum wage to $15 an hour, and increasing funding for pensions and school aid. POLICY SCAN 2018 • 35

• New Jersey will be the seventh state in which Democrats responded that it is precisely because judges are asked control both the legislative and executive branches. to pass on the constitutionality of laws the legislature Unlike in Washington, DC, there are no supermajority passes that it is important that they be independent from requirements to end filibusters, so loss of dual-party the General Assembly. control of government gives the incoming Governor the ability to reverse the conservative policies of Christie and • State lawmakers could overhaul the way $9.4 billion bolsters a progressive path forward. in public school dollars are spent annually, affecting the way that North Carolina’s 1.6 million public school NEW MEXICO students are educated. Legislators are looking at changing how the state funds K–12 education • L argely due to an unchecked methane cloud the size following a highly critical legislative staff report that of Idaho hovering over the Four Corners region, which recommended reforming or overhauling the school is undeniably connected to natural gas venting and funding system. Officials from the Department of Public flaring, methane recapture is already turning into a hot- Instruction have urged lawmakers to show caution button issue, with the 2019 gubernatorial front runner before making any major changes, but some legislators committing to curbing methane waste, and welcoming insist an overhaul is needed. the jobs that would come with methane mitigation. NORTH DAKOTA • T he long-fought battle of several coalitions to tap the state’s Land Grant Permanent Fund, one of the largest • N orth Dakota continues to pursue unmanned systems. funds in the country for the benefit of early childhood Aerially, the state is an FAA-approved UAS Test Site, education, will continue, while citizens and lawmakers on with on-the-ground presences from major and small all sides continue to exhaust all other possible options. unmanned aircraft system companies. Meanwhile, a push has begun to develop a corridor in the center of NEW YORK the state for ground-based unmanned systems as well. • Like many states across the country, New York will • North Dakota’s oil and gas industry, the largest driver be keeping a close eye on a range of legislative and of the state’s economy and budget, is poised to hit administrative developments in Washington, DC, that record production levels in 2018. Such output will stress could have potentially significant fiscal impacts on its current infrastructure and create tension between the state. Of particular concern are the limitations on operators and regulatory authorities, especially regarding property and state and local tax deductions that were limits on flaring natural gas from oil wells. Wind and included in the federal tax overhaul and will have an coal will continue squaring off on policy as the former’s outsized impact on wealthy high-taxed downstate output grows significantly and challenges the capacity suburban communities. of the state’s electrical grid. The coal industry is hopeful for successful results on research projects regarding • W ith New York City coming off a so-called “summer CO2 sequestration. The industry is testing injection into of hell” that included major mass transit disruptions formations deep in ground, as well as using CO2 for leaving commuters stranded across the region, there future tertiary recovery in the state’s oil and gas industry. is expected to be a newfound focus on investing in the Metropolitan Transportation Authority (MTA) and other OHIO transportation upgrades. The Governor, Assembly and Senate are certain to have different priorities, and debate • Every two years the Ohio legislature passes a capital about what to fund and how to fund it are likely to bill to fund the brick-and-mortar operations of state dominate the 2018 session. agencies and the higher education community in addition to state appropriations for community projects NORTH CAROLINA that can spur economic development at the local level. This money varies depending on the health of the state • R epublican legislators have created an interim select treasury, but is estimated at $180 million dollars for the committee to study changing the election of judges pending biennial budget. to General Assembly selection, stating that legislators might be in the best position to do that job as they write • With intense statewide officer elections ahead in the laws that judges are asked to interpret. Critics have 2018, the General Assembly is working on changing 36 • POLICY SCAN 2018

how congressional lines are drawn in Ohio. The intent PENNSYLVANIA of this effort is to make all of the state’s districts more competitive in the general election. It has • Pennsylvania has an abundant supply of natural gas bipartisan support. through the Marcellus Shale and remains the only state that does not impose a severance tax on natural gas OKLAHOMA production. The shale industry continues to fight against the imposition of a tax and has prevented the House • A debate has emerged between a prominent advocacy from considering Senate-passed tax legislation in the organization and Oklahoma’s oil and gas producers past. Governor Tom Wolf will make this a top budget concerning the taxation of oil and gas production in priority in 2018. the state. Restore Oklahoma Now has recently filed paperwork with the Oklahoma Secretary of State, • Similar to efforts in other northeastern and Midwestern asking that a 7 percent tax on oil and gas production states, nuclear reactor owners are looking to states be put to a public statewide vote. The group argues for ratepayer subsidies to allow them to compete that this tax would generate approximately $333 million with cheaper, natural gas-produced electricity. Even dollars, more than enough to provide the state’s public if granted some relief from FERC, the nuclear energy school teachers with a $4,000 raise. The fossil fuel industry is still expected to pursue state-specific industry has argued that such a tax would harm the economic relief in 2018. economic engine of the state while conceding that teacher pay must be addressed. Oklahomans will know RHODE ISLAND by mid-March whether enough signatures have been gathered to require the referendum. • 2 018 will be a very busy election year as all General Assembly members and all general officers are up for • One Oklahoma state representative has announced his re-election. Governor Gina Raimondo is hoping to be intention to reintroduce legislation in 2018 to repeal the re-elected for her second and final term, but must first state’s Film Rebate Enhancement Program, a tax credit address a $265 million dollar budget deficit, and will need aimed at encouraging television and film production the Speaker and Senate President to agree on some companies to do business in Oklahoma. Rep. Kevin Calvey combination of tax increases and/or spending cuts to do it. of Oklahoma City previously introduced legislation to kill the program during the 2017 special session, but that bill • A group of private investors is looking for financial stalled before passage. At present, the tax credit is set to assistance from the state to build a new baseball stadium expire in 2024, though cancellation in 2018 could send for the Pawtucket Red Sox, the Triple-A affiliate of the shock waves through the state’s film industry. Boston Red Sox. The proposal to build the new stadium calls for $71 million in public borrowing (at a cost of $158 OREGON million over30 years), with $38 million to be covered by state ($23 million) and city taxpayers ($15 million) and the • The Oregon legislature will meet for a short, five- rest by the team. week session beginning in February. The agenda will be shaped by what happens at a special election SOUTH CAROLINA on January 23, when voters consider Measure 101, a referral of the Medicaid funding package that the • E lectric utility rate reform and energy policy will be the legislature passed in 2017. If it does not pass, the 2018 dominant issue in the wake of South Carolina Electric & session will be dominated by the resulting $320 million Gas abandoning a nuclear reactor development after budget gap to support Medicaid expansion, which will spending $9 billion. Sweeping reform bills in the House likely rely in a combination of general fund revenue and Senate have passed committee that would mandate and cuts to benefits or coverage for children, seniors ratepayer relief but could also bankrupt the utility. and the disabled. Both legislative and executive branch activity with • O ther issues that will be debated in the short session bipartisan support is expected in South Carolina to include climate legislation (cap and trade/carbon tax), address the ongoing opioid crisis. Off-session legislative affordable housing, transparency in drug pricing, and committees have continued studying the problem and paid family leave. Most are likely to carry over to the 2019 numerous bills and polices will be considered. long session. POLICY SCAN 2018 • 37

SOUTH DAKOTA prioritizing child protection reforms and border security. Texas will not have another regular legislative session • As frustration with moderate Republican Gov. Dennis until January 2019, but state leaders are already working Daugaard, some conservative South Dakota legislators on responding to the impacts of Hurricane Harvey, are looking to ride out the remaining year of the finding ways to address school finance and property tax governor’s term in 2018. Following Daugaard’s support challenges, and continued improvements to the state’s for Medicaid expansion as well as his veto of recent foster care and juvenile justice systems. legislation that would have allowed for South Dakotans to carry concealed handguns without a permit, as many • L egislative committees are already meeting on Harvey- eyes are focused on the race to succeed him as are on related issues, including disaster relief and emergency the upcoming legislative session. Two top Republicans, housing and determining the financial costs of repairing Congresswoman Kristi Noem and state Attorney General schools and the impact on students, teachers and Marty Jackley will battle for the GOP nomination, while school accountability. Legislators will examine the state Senator Billie Sutton hopes to become the state’s allocation of federal funds to Harvey recovery efforts and first Democratic governor in over 40 years. identify ways in which funding could be implemented to reduce or prevent future storm and flood damage. • South Dakota lawmakers are expected to help lead Committees will also continue to examine state budget- the national movement towards eliminating workplace related challenges, including possible shortfalls, and harassment in early 2018. As the legislative session begins issues having to do with property tax, school finance, in January 2018, members of the South Dakota legislature and cybersecurity and IT modernization. will take part in trainings on sexual harassment, ethics, and professionalism. While the South Dakota legislature has UTAH undergone this type of training before, recent bipartisan support for another round of training has taken root in the • Utah is projected to double in size in less than 50 years, wake of national headlines concerning sexual harassment and the state’s infrastructure must be prepared for that in government, with some South Dakota legislators growth. In 2017, after major ballot measures for funding discussing the prospect of codifying a requirement for failed in the largest county in the state–Salt Lake future trainings on the matter. County—the legislature passed a $1 billion bond. To that end, the legislature worked during the interim, through TENNESSEE a transportation task force, and will certainly look to make necessary legislative changes to help prepare for • G OP-sponsored legislation would create an the coming growth. Including potential changes to the infrastructure for the use of medicinal cannabis for governance of the Utah Transit Authority (light rail/bus individuals with certain diagnoses in Tennessee. While service) and to the way Utah funds transportation. opposition exists from many in the law enforcement community, advocates see such legislation as one • I n 2016, Gov. Garry Herbert asked that a committee solution to curb the opioid epidemic. study the possibility of creating an inland port in Utah. The resulting committee was made up of business, • A pilot program, implementing school vouchers will political, community and academic leaders and likely be introduced again, and is an effort that has been ultimately decided the issue was worth additional ongoing for several years. Some concerns remain over consideration. Utah has now begun moving forward with how the state will assess the progress of students who a market assessment and feasibility study. participate in the voucher program and what effect the program could have on public school budgets. VERMONT TEXAS • L egislation to gradually raise the minimum wage to $15 per hour over an undetermined number of years will likely • After a contentious 2017 legislative session featuring a face a vote within the first weeks of the legislative session. wide House vs. Senate divide, wrangling over property Vermont’s 2018 minimum wage is $10.50. Legislators are tax relief and school funding, and a special session also pursuing a family medical leave insurance program brimming with impassioned social issue debates, Texas similar to those in other states. Governor Phil Scott has lawmakers passed a $217 billion, two-year budget opposed these measures in the past. 38 • POLICY SCAN 2018

• Following a number of hearings held out of session, WEST VIRGINIA the House Commerce and Economic Development Committee is expected to pursue measures to protect • Since the Republican Party took control of the state consumers from data breaches as well as credit and legislature in 2014, a concerted effort has been identity theft. The Senate is also working on several undertaken at various agencies to determine how they companion bills. Their efforts are being supported by the can be streamlined and reorganized. This session, expect Office of the Attorney General. efforts to reorganize the Department of Health and Human Resources and to consider electing the state VIRGINIA Board of Education (its members are currently appointed by the governor), as well as other department and • M ost in Richmond, the state’s capital, expect that the agency changes. 2018 session will bring, at long last, some consensus on Medicaid expansion between its proponents in • E fforts aimed at increasing West Virginia’s ability to the Governor’s Office and Senate and the heretofore attract new businesses and corporate investment recalcitrant GOP House leadership. will continue. In particular, there is a commitment, at multiple levels of the legislature and executive branch, • A newly fortified Virginia House Democratic Caucus to eliminate the business inventory tax, as well as to will likely attempt to advance a multitude of social and examining other possible tax structure changes. environmental initiatives that have been bottled up by the former Republican supermajority. Among those issues are WISCONSIN greater government control over public electric utilities, gun control, and the removal of Confederate monuments. • Wisconsin Manufacturers & Commerce, the state’s chamber of commerce, is advocating for a package of WASHINGTON workers compensation reforms that were approved by the State’s Worker’s Compensation Advisory Council • The national debate over net neutrality in the wake of (WCAC), a ten-person Department of Workforce the FCC’s recent decision has reached Olympia, as state Development council that includes employer groups Rep. Drew Hansen (D-Bainbridge Island) has introduced and labor unions, including the Wisconsin Manufacturers legislation that would make it illegal for broadband & Commerce (WMC) and the AFL-CIO. The reform internet service providers to “block lawful content, receiving the most attention is the inclusion of a medical applications, services, or nonharmful devices,” “engage fee schedule, which is opposed by the Wisconsin in paid prioritization,” or disrupt “users’ ability to select, Hospital Association and State Medical Society. WMC access, and use broadband internet access service or the and other business groups argue the cost of procedures lawful internet content, applications, services, or devices covered by the worker’s compensation program in of their choice.” Washington State’s executive brand has Wisconsin are among the highest in the country. The also weighed in, with Gov. Jay Inslee and Attorney General medical groups counter that those injured on the job Bob Ferguson announcing a state level plan to preserve return to work quicker and that there is less litigation in net neutrality. Wisconsin cases than in other states. • The 2018 Washington State legislative session will deal • Whether the legislature is in or out of session, the with at least two Democratic bills aimed at restricting biggest public policy item that will continue to drive access to firearms which gun right’s advocates have 2018, especially because Governor Scott Walker is up blasted as anti-Second Amendment. State Rep. for re-election, is Taiwanese technology giant Foxconn’s Nicole Macri has announced her intention to propose plan for a $10 billion, 13,000-employee manufacturing legislation aimed at repealing Washington’s state firearm complex in Southeastern Wisconsin. Every deadline and preemption statute, while Senator Kevin Van De Wege tax dollar involved in the deal is being highly scrutinized. has proposed what effectively amounts to an assault Proponents, the Governor among them, are looking weapon ban, and would criminalize devices aimed at to celebrate every milestone and every downstream accelerating the rate of fire of a semi-automatic weapon. economic impact. Opponents are poised to jump Legislative holdovers from the 2017 session proposing a on every missed deadline and point out programs registration licensing system for some firearms as well as that could have been funded with the $3 billion in requiring gun owners to lock up their weapons remain in taxpayer incentives. the legislative hopper as well. POLICY SCAN 2018 • 39

WYOMING • Wyoming’s Department of Education is requesting approximately $100 million more in school district • Wyoming House Speaker Steve Harshman is rumored funding in the state’s biennial budget for 2019–2020. to be considering a run for governor, but told reporters The state distributes school funding through a recently his focus remains on the legislature and that block grant model to its 48 school districts, and the his priorities ahead of the 2018 budget session in department’s increased request is up from the $1.6 February are a need for economic diversification and billion requested in 2017–18. With Governor Matt Mead resolving the state’s education funding crisis. If Speaker predicting a potentially $1 billion deficit over the next Harshman were to run, he could be greeted in the five years, state lawmakers will work to do more with Republican primary by State Treasurer Mark Gordon less to avoid shortchanging Wyoming’s public schools. and Secretary of State Ed Murray. So far, only Democrat Mary Thorne and political newcomer Bill Dahlin (R) have thrown their hats in the ring. Key contacts For more information about key dates in the year ahead or to discuss your strategic planning for 2018, please contact any member of Dentons’ US Public Policy team, or your Dentons lawyer or professional. Eric Tanenblatt Michael Zolandz Chair, Public Policy, Washington, DC Chair, Federal Regulatory D+1 202 496 7373 and Compliance, Washington, DC eric.tanenblatt@dentons.com D+1 202 408 9204 michael.zolandz@dentons.com Ambassador Gordon Giffin Partner, Washington, DC Maryscott (Scotty) Greenwood D+1 202 496 7156 Principal, Washington, DC gordon.giffin@dentons.com D+1 202 496 7157 maryscott.greenwood@dentons.com Sander Lurie John Russell, IV Principal, Washington, DC Principal, Washington, DC D+1 202 408 7003 D+1 202 408 6392 sander.lurie@dentons.com john.russell@dentons.com Rodney J. Boyd Heather (V. Heather) Sibbison Partner, St. Louis Partner, Washington, DC D+1 314 259 5825 D+1 202 408 6439 rodney.boyd@dentons.com heather.sibbison@dentons.com Thurbert Baker Partner, Washington, DC D+1 202 496 7653 thurbert.baker@dentons.com 40 • POLICY SCAN 2018

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^Dentons is the world’s largest law firm, delivering quality and value to clients around the globe. Dentons is a leader on the Acritas Global Elite Brand Index, a BTI Client Service 30 Award winner and recognized by prominent business and legal publications for its innovations in client service, including founding Nextlaw Labs and the Nextlaw Global Referral Network. Dentons’ polycentric approach and world-class talent challenge the status quo to advance client interests in the communities in which we live and work. dentons.com dentons.com © 2018 Dentons. Dentons is a global legal practice providing client services worldwide through its member firms and affiliates. This publication is not designed to provide legal or other advice and you should not take, or refrain from taking, action based on its content. Please see dentons.com for Legal Notices.   CSBrand-6234 Policy Scan 2018-48 — 03/01/2018 42 • POLICY SCAN 2018